SP's AirBuz February-March 2016 by SP Guide Publications Pvt Ltd

exclusive: interview with Dinesh Keskar, Boeing p 14

February-march 2016

`100.00 (India-based Buyer Only) Volume 9 • issue 1

Singapore Airshow: AsiaPacific’s Crowning Glory p 30

AIRBUZ

A n E x c l u s i v e M a g a z i n e o n C i v i l Av i at i o n f r o m I n D I A

si ve

www.spsairbuz.com

BIOFUEL, THE NEXT ALTERNATIVE p 20

RNI NUMBER: DELENG/2008/24198

PAGE 8

NEW POLICY AWAITING CABINET NOD a rendezvous with Union Minister of Civil Aviation P. Ashok Gajapathi Raju An SP Guide Publication

The difference is monumental. We’re beating our commitment on improved fuel burn efficiency, now exceeding 16%. Just the kind of ongoing improvement we told you to expect from our PurePower® Geared Turbofan™ engine architecture. Learn more at PurePowerEngines.com. PurePower Geared Turbofan Engines Visit us at the Singapore Airshow, Booth L39.

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964

table of contents

Exclusive

Jayant Baranwal, Editor-in-Chief of SP’s AirBuz in an exclusive rendezvous with the Union Minister of Civil Aviation, P. Ashok Gajapathi Raju. Exclusive

EXCLUSIVE: INTERVIEW WITH DINESH KESKAR, BOEING P 14

FEBRUARY-MARCH 2016

`100.00 (INDIA-BASED BUYER ONLY) VOLUME 9 • ISSUE 1

SINGAPORE AIRSHOW: ASIAPACIFIC’S CROWNING GLORY P 30

AIRBUZ

A N E X C L U S I V E M A G A Z I N E O N C I V I L AV I AT I O N F R O M I N D I A

C LU S

WWW.SPSAIRBUZ.COM

BIOFUEL, THE NEXT ALTERNATIVE P 20

P8 NEW POLICY AWAITING CABINET NOD

Cover: An interaction with Union Minister of Civil Aviation, P. Ashok Gajapathi Raju on wide ranging subjects pertaining to India’s civil aviation scenario. Cover Image: Neetu Dhulia / SP Guide Pubns

PAGE 8

RNI NUMBER: DELENG/2008/24198

rendezvous / civil aviation minister

NEW POLICY AWAITING CABINET NOD A RENDEZVOUS WITH UNION MINISTER OF CIVIL AVIATION P. ASHOK GAJAPATHI RAJU AN SP GUIDE PUBLICATION

SP's AirBuz Cover 01-2016.indd 1

10/02/16 2:06 PM

interview / boeing P14 ‘Right capacity not over capacity is the solution for India

In an interview with Editor-in-Chief Jayant Baranwal, the Senior Vice President of Boeing (Asia-Pacific & South Asia), Dinesh Keskar talks on how the company is going to expand its market share. P12 show preview / india aviation 2016 India’s Civil Aviation Sector: Potential as Global Manufacturing & MRO Hub P20 environment / biofuel engines / pratt & whitney P18 PERFORMANCE EXTRAORDINAIRE

The Pratt & Whitney PW1000G is a high-bypass geared turbofan engine family, currently selected as the exclusive engine for the Bombardier CSeries; Mitsubishi Regional Jet and Embraer’s next-generation E-Jets.

BIOFUEL, THE NEXT ALTERNATIVE

P24 air safety / Drones

P30 Airshow / preview Singapore Airshow: Asia-Pacific’s Crowning Glory departments P2 A word from Editor P3 News Briefs P32 FInally

PROLIFERATION OF UAVs: CAUSE FOR CONCERN? P26 industry / regulations CAPE TOWN CONVENTION AND ITS IMPLEMENTATION IN INDIA

LET’S PARTNER FOR THE INDIA’S LARGEST CIVIL AVIATION SHOW. THE OFFICIAL MEDIA : SP GUIDE PUBLICATIONS

Reach us @ advertising@spguidepublications.com

SP’S AIRBUZ • ISSUE 1 • 2016 • 1

A word from

editor

Publisher And Editor-in-Chief

Jayant Baranwal Editor

Air Marshal B.K. Pandey (Retd) Assistant Group Editor

R. Chandrakanth (Bengaluru) Contributors

Group Captain A.K. Sachdev (Retd) Group Captain Joseph Noronha (Retd) S.R. Swarup, Vasuki Prasad Shriniwas Mishra Chairman & Managing Director

Jayant Baranwal Planning & Business Development

Executive Vice President: Rohit Goel admin & coordination

Bharti Sharma Creative Director

Anoop Kamath Graphic DesignerS

Vimlesh Kumar Yadav Sonu Singh Bisht Designer (3D animation): Kunal Verma Research Asst/Graphics: Survi Massey SALES & MARKETING

Director Sales & Marketing: Neetu Dhulia General Manager Sales: Rajeev Chugh SP’s websites

Sr Web Developer: Shailendra Prakash Ashish Web Developer: Ugrashen Vishwakarma © SP Guide Publications, 2016 Subscription/ Circulation

Annual Inland: `600 • Foreign: US$180 E-mail: subscribe@spguidepublications.com subscribe@spsairbuz.com LETTER TO EDITOR

editor@spsairbuz.com For Advertising details contact

neetu@spguidepublications.com rajeev.chugh@spguidepublications.com SP GUIDE PUBLICATIONS PVT LTD

A-133 Arjun Nagar (Opposite Defence Colony), New Delhi 110003, India. Tel: +91 (11) 24644693, 24644763, 24620130 Fax: +91 (11) 24647093 E-mail: info@spguidepublications.com BENGALURU, INDIA

204, Jal Vayu Vihar, Kalyan Nagar Bengaluru 560043, India. Tel: +91 (80) 23682204

www.spguidepublications.com Owned, published and printed by Jayant Baranwal, printed at Kala Jyothi Process Pvt Ltd and Published at A-133, Arjun Nagar (Opposite Defence Colony), New Delhi 110003, India.

ith the NDA government completing 20 months in power, one sector of the economy that is beginning to display signs of positivity is the Indian civil aviation industry. As per statistics released by the Directorate General of Civil Aviation (DGCA), during the year 2015, the civil air traffic in the domestic segment has registered a 20 per cent growth, a healthy rate of growth by any standard. This is attributable to the combined effect of a number of factors such as lower airfares on account of reduction in the price of aviation turbine fuel (ATF), increase in the number of flights on existing high density routes, emergence of new players on the scene, enhanced regional connectivity and a healthy competition amongst the domestic carriers. In January this year, Jayant Baranwal, Editor-in-Chief, SP’s AirBuz accompanied by Neetu Dhulia had an exclusive rendezvous with the Minister of Civil Aviation (MoCA), P. Ashok Gajapathi Raju during which there was a wide ranging discussion on a number of issues related to the Indian civil aviation industry. During the interaction, the Minister of Civil Aviation catalogued the steps already undertaken by the government or that are on the anvil to revitalise the Indian civil aviation industry. A major step would be to implement the National Civil Aviation Policy which has been under formulation for about a year and should see light of the day in the near future. A detailed account of the interaction between the team from SP Guide Publications and the MoCA has been included in this issue of SP’s AirBuz. This issue also has an interview by Editor-in-Chief Jayant Baranwal with Dinesh Keskar, the Senior Vice President of Boeing (Asia-Pacific & South Asia). Always optimistic about the prospects in the Indian civil aviation market, Boeing has projected India’s demand for aircraft over the next two decades to touch 1,740 valued at $240 billion. The optimism is becoming a reality with Indian carriers placing large orders for aircraft to match their plans for growth. In the interview with the Editor-in-Chief, Dinesh Keskar spelt out the strategy and plans for garnering market share. A major event in the regime of civil aviation is the Singapore Airshow, the fifth edition of which is scheduled to be held from February 16 to 21, 2016. This is Asia’s largest Airshow and is regarded as one of the most important aerospace and defence exhibitions in the world. A curtain raiser on the Singapore Airshow 2016 by R. Chandrakanth of SP’s AirBuz, has been included in this issue. In his article on bio-fuels, Chandrakanth reviews the global effort towards progressively increasing use of bio-fuels in place of fossil fuels for civil aviation. Apart from the issue of diminishing reserves of fossil fuels, use of bio-fuel in civil aviation will have beneficial impact on the environment owing to significantly reduced CO2 emissions. Another area of concern for civil aviation is the proliferation of unmanned aerial vehicles (UAVs) that has been driven primarily by the commercial allure of these platforms. This is giving rise to new hazards for civil aviation as currently in India, there are no regulatory mechanisms in place to integrate UAVs with civil air traffic. All this and more apart from the regular features. Welcome aboard and happy landings!

A pp l i e d f o r 2 • SP’S AIRBUZ • ISSUE 1 • 2016

www.spsairbuz.com

B.K. Pandey Editor

quently, what elevated the business jet from a luxury toy to what is increasingly seen as a vital corporate tool? In the US, hundreds of Fortune 500 companies now flaunt their own aircraft, with companies arguing that this vital conveyance saves time and boosts productivity. A recent CNN report quoted

NewsBriefs

( INDUSTRY NEWS First Airbus A320neo Delivered to Lufthansa

In January this year, Airbus delivered the first A320neo (new engine option) to German flag carrier Lufthansa that became the launch customer in place of Qatar Airways. Lufthansa is the largest customer of Airbus aircraft currently operating or having placed orders for every model of airliners from the European aerospace major. The current generation of A320s is fitted with 180 seats in an all-economy class configuration and the A320neo is the latest version of the popular single-aisle narrow-body A320 family. It is powered by the new Pratt & Whitney PurePower Geared Turbofan PW1100G-JM engines which have an improved efficiency and reduced fuel burn by 15 per cent apart from reduced emissions and noise levels as compared with the existing generation aircraft. India’s largest and leading domestic low-cost carrier IndiGo Airlines has 430 A320neos on order. The other low-cost carrier GoAir has 72 Airbus A320neos on order. Both these budget carriers are expected to gain significantly with the induction of new aircraft with fuel-efficient engines in the context of the high cost of aviation turbine fuel. By the year 2020, Airbus aims to achieve reduction in fuel consumption and noise levels by 20 per cent.

20 Per Cent Increase in Domestic Air Traffic

As per statistics released by the Directorate General of Civil Aviation (DGCA), in 2015, there was an increase in air travel in the domestic segment of the Indian airline industry by 137.08 lakh passengers as compared with the previous year. In 2015, India’s domestic airlines carried 810.91 lakh passengers as against 673.83 lakh in 2014 representing a growth of 20 per cent. In December 2015 alone, there was an increase of 19.71 per cent with 77.09 lakh fliers during the month as against 64.90 lakh

same period in 2014. In December 2015, the passenger load factor increased compared with previous month, primarily due to the tourist season. Aviation sector analysts attribute the growth in air travel to factors that include lower airfares compared with previous years owing to cut in the price of aviation turbine fuel, competition among carriers, adding new schedules to existing destinations as well as opening up of some regional routes. The report also showed that IndiGo remained the market leader, flying 297.43 lakh passengers and garnering 36.7 per cent of the market share. Jet Airways along with its subsidiary cornered a market share of 22.5 per cent carrying 182.23 lakh passengers last year. The national carrier Air India had a market share of 16.4 per cent carrying 133.35 lakh passengers. SpiceJet, which returned from the verge of closing down in 2014, managed to stay float with 11.6 per cent market share. It flew 94.25 lakh passengers as it increased its services over a period of time. Vistara, the new airline to hit the skies last year, managed 1.3 per cent market share carrying 10.66 lakh passengers. Other new entrants Air Pegasus and Trujet, both regional airlines, had a market share of 0.1 per cent each, flying 1.17 lakh and 1.14 lakh respectively. Air Pegasus started operations in May 2015 while Trujet started flying in August 2015. Vijayawada-based Air Costa, which hopes to expand its operation across India this year, also had 0.9 per cent market share flying around 7.30 lakh people mainly in South India.

India Emerging Biggest Aircraft Market

The two global aerospace majors Airbus and Boeing have always made optimistic forecasts about the growth of civil aviation in India driven by a rising middle class, GDP growth and under penetration of airlines. These factors make India an attractive market. Earlier this year, Boeing projected India’s demand over the next 20 years for aircraft to touch 1,740 valued at $240 billion. The optimism is getting translated into orders with Indian carriers placing multibillion contracts to cater to growth plans. In August 2015, IndiGo ordered 250 A320neo planes with Airbus valued at a $25.7 billion, the largest ever order for the European plane maker. Boeing’s latest market forecast claims it will deliver 38,050 planes till 2034 with the highest share (38 per cent) in the Asian market. India will require 1,740 planes over the same period.

The current fleet size in India does not stack up to some of the Asian countries or even China, but announcements by IndiGo and Jet Airways are an indication that aviation in India too is poised for growth. According to Airbus, India will be one of the top three aviation markets globally in the next 20 years. Airbus is expecting an annual growth rate of over 11 per cent for the domestic market in India over the next ten years, while the combined growth rate for domestic and international routes would also be more than ten per cent.

Deliveries of Commercial Airplanes in 2015 by Boeing

Boeing delivered 762 commercial airplanes in 2015, 39 more than the previous year and highest ever for the company as it enters its centennial year. “The Boeing team has worked hard to achieve strong performance,” said Boeing Commercial Airplanes President and CEO Ray Conner. “Our team did a fantastic job achieving higher deliveries and getting our products to our customers as quickly and efficiently as possible. This will continue to be our focus.” In 2015, Boeing recorded 768 net orders, valued at $112.4 billion at current list prices. At year end, Boeing held 5,795 unfilled orders from customers worldwide. “We had a solid year of orders in 2015, maintaining a strong, balanced backlog that will help ensure a steady stream of deliveries for years to come,” said Conner. Worldwide demand for air travel has continued to be robust, said Randy Tinseth, Vice President, Marketing, Boeing Commercial Airplanes. “Global passenger traffic in most key regions is increasing,” said Tinseth. “Our customers continue to perform well in the market and we’ll continue to support them with the industry’s best products and services.” Conner said: “Our newest development products are on schedule and poised to provide world-class value to our customers. We could not have accomplished all we did in 2015 without the support and hard work of our employees, suppliers, partners and the community.”

HAL to Manufacture Regional Aircraft The state-owned Indian aerospace major the Hindustan Aeronautics Ltd (HAL) will float a tender by March 2016 inviting global aerospace majors for partnership in the design and development of a 50- to 70-seat passenger aircraft to provide air connectivity to small cities across India. The HAL Board of Management had approved the decision to invite international bids to co-develop SP’S AIRBUZ • ISSUE 1 • 2016 • 3

NewsBriefs

Events Calendar Singapore Airshow 2016

16–21 February Changi Exhibition Centre, Singapore www.singaporeairshow.com

Heli-Expo

29 February–3 March Louisville, Kentucky, USA http://heliexpo.rotor.org

Global Aerospace Summit

7–8 March Abu Dhabi National Exhibition Centre (ADNEC) in Abu Dhabi, UAE http://aerospacesummit.com

Abu Dhabi Air Expo

8–10 March Al Bateen Executive Airport, Abu Dhabi, UAE http://abudhabiairexpo.com

will be a requirement for 200 such aircraft in India in the next five years. “The biggest weakness of the aerospace industry in India is the dependency on foreign engines. In the next 25 years, I see India having its indigenous aircraft with indigenous engines,” Suvarna Raju said. The National Aerospace Laboratories (NAL) and HAL had jointly planned to set up a special purpose vehicle for a regional transport aircraft RTA-70 but this was later scrapped because of funding issues. NAL had in 2007, settled on a design and selected a turboprop engine from Pratt & Whitney for the plane that did not take off from the drawing board. G. Madhavan Nair, former Chairman of the ISRO, had headed a committee to identify local partners for the project. India has built trainer aircraft and helicopters for the military, but its commercial aircraft programme is yet to find its feet.

Delay in Delivery of Airbus A320neo Aircraft to IndiGo

India Aviation

16–20 March Begumpet Airport, Sardar Patel Road, Hyderabad, India www.india-aviation.in

Defexpo India 2016

28–31 March Naqueri Quitol in Quepem Taluka of South Goa, India https://defexpoindia.in

Aircraft Interiors Expo

5–7 April Hamburg Messe, Hamburg, Germany www.aircraftinteriorsexpo.com

SUN ‘n FUN Int’l Fly-In Expo

5–10 April Lakeland Linder Regional Airport, Lakeland, Florida, USA www.sun-n-fun.org

ABACE

12–14 April Shanghai Hawker Pacific Business Aviation Service Centre, Shanghai, China https://abace.aero

European Business Aviation Convention and Exhibition (EBACE) 24–26 May Palexpo, Geneva, Switzerland http://ebace.aero

the aircraft. The project is estimated to cost `7,000 crore for three prototypes and certification. As per T. Suvarna Raju, Chairman and Managing Director of HAL, there 4 • SP’S AIRBUZ • ISSUE 1 • 2016

IndiGo, India’s largest airline by market share, has revealed that deliveries of Airbus A320neo aircraft will be delayed. It has ordered 430 such planes and had expected commencement of delivery on December 30, 2015. IndiGo said it received an update from Airbus that delivery of the first aircraft will be delayed due to “industrial reasons”. Though the essence of “industrial reasons” was not clarified, a report in aviation magazine Air Transport World said that an unresolved issue connected with the aircraft’s geared turbofan engine was the reason for the delay and the last-minute swap in the launch customer for the aircraft. The engine is made by Pratt & Whitney and promises 15 per cent lesser fuel burn. “At this time, IndiGo does not have a clear visibility of its future A320neo delivery schedule and the potential for additional delays exist. We are looking at mitigating the potential shortfall in capacity through other options,” the airline said. IndiGo has 98 Airbus A320 aircraft at present and plans to add another 23 in the next financial year. The airline may be forced to dry lease aircraft on a short term basis. Last year, IndiGo

www.spsairbuz.com

took 12 A320s on lease from Indonesia’s Tigerair to ramp up capacity.

( Airline News Infusion of Funds into Air India in 2016-17

Air India has sought around `4,300 crore from the government for the financial year 2016-17 as it strives for a turnaround amid stiff competition. The demand has been made as part of the wish list for the budget for the financial year 2016-17 starting from April 1, 2016. The airline is surviving on a `30,231-crore bailout package sanctioned by the UPA Government in 2012. Under the turnaround plan which runs till March 2021, it has already received `22,280 crore. Air India is saddled with debt of around `40,000 crore on account of the long-term borrowings to finance purchase of aircraft. The national carrier has sought about `3,300 crore from the government under the turnaround plan and backlog amount of around `977 crore. The backlog amount is mainly on account of steep appreciation in dollar against the rupee. The financial situation looks better since there is a reduction in the price of aviation turbine fuel. Air India has already tied up for dry lease of 14 Airbus A320neo planes with a Kuwaiti Lessor to be inducted in the financial year 2017. The airline plans to dry lease another 30 A320 airliners in its fleet over a three-year period in its bid to augment capacity in the highly competitive domestic market. Besides, the state-run airline will also hire 534 Airbus A320 pilots and 1,000 cabin crew, in line with its aircraft induction plan.

Challenges for the New Carriers in India

The year 2015 witnessed the launch of three new airlines namely Vistara, Air Pegasus and Trujet. Given the stiff competition for market share and an adverse operating environment, the three new carriers will have to cope with the daunting challenges

NewsBriefs

of the industry poses to be able survive and more importantly, prosper. For regional player Air Costa which launched its operations in the latter part of 2013, traffic grew a robust 30 per cent plus year-on-year in the January-November 2015 period. AirAsia India, which commenced operating in June 2014, flew nearly thrice the number of passengers between June and November 2015 than it did a year before. From just 15,000 passengers in January 2015 when it was launched, full service carrier Vistara, the Tata-Singapore Airlines joint venture, increased traffic nearly ninefold to 1.36 lakh in November 2015. Market leader IndiGo Airlines continues to entrench its position. It grew traffic more than 40 per cent year-on-year in the January-November period on a high base. In fact, it carried more than half the additional passenger traffic during the period. Its market share increased to nearly 37 per cent, up from 31 per cent a year ago. SpiceJet was the only airline to see passenger traffic shrink last year. That was due to its near catastrophic failures that had pushed it to the point of shut down in late 2014. However, with the change in management, the airline has regained some of the lost ground and in fact, has bounced back.

Boeing 737s, 14 Bombardier Q400s and two leased A320 family Airbus planes. “SpiceJet is evaluating all options before placing order for new aircraft. As part of this exercise, an Embraer team has also given its presentation,” the sources said. The Gurgaon-based airline has not yet decided about the type or types of new aircraft it will buy nor the number of planes, the sources said.

( INFRASTRUCTURE User Development Fee at Delhi Airport

HINDUSTAN AERONAUTICS LIMITED (HAL)

With effect from February 1, 2016, C.V. Ramanarao, General Manager (Finance), has taken over as Director (Finance) of HAL.

UNITED TECHNOLOGIES CORPORATION (UTC) On January 14, 2016, UTC announced the following appointments in the company: l Robert Leduc as President of Pratt & Whitney. l Dave Hess as Executive Vice President and Chief Customer Officer for Aerospace.

GULFSTREAM

Gulfstream Aerospace Corporation has recently promoted Nicolas Robinson to the position of Regional Vice President of New Aircraft Sales for Africa.

ATR

On January 11, 2016, ATR announced the appointment of Alessandro Amendola as Senior Vice President Engineering of the company.

Embraer Jets for SpiceJet’s Expansion Plans

SpiceJet, which has activated plans to place orders for new planes to expand its fleet strength, is considering Embraer jets for its fleet, among others. As per top airline sources, late last year, the Brazilian aircraft manufacturer had made a presentation on its aircraft to the SpiceJet management, which is exploring all options before taking a final call on the purchase order. As per the management of SpiceJet, all options are on the table. If the budget carrier opts for Embraer jets along with other types of aircraft, it will become the second domestic carrier to have such planes, after regional airline Air Costa. The now-defunct Paramount Airways also had an all-Embraer fleet when it was operational. SpiceJet currently has a total of 41 aircraft in its fleet comprising 25

appointment

The Delhi International Airport Limited (DIAL) has appealed against the order passed in December 2015 by the Airport Economic Regulatory Authority (AERA) which reduced user development fee (UDF) by 89 per cent. The second appeal has been filed even as its plea against the tariff order of 2012 is pending for the last four years. In its December order, the AERA slashed the UDF levied on domestic and international passengers at Delhi Airport to `10 and `45 respectively. Also, arriving passengers will no longer be charged any UDF. The AERA order for Delhi Airport covers the second control period from 2014-19. However, the reduced charges will not take effect till appeals on the earlier tariff order are settled. Now, the Delhi Airport has challenged the second control period order too at the AERA appellate tribunal (AERAAT). DIAL had sought a 42 per cent increase in rates and over and above the 346 per cent rise granted to it by the regulator for the first control period (2009-14). “DIAL has appealed to AERAAT on issues related to tariff for first control period which has bearing on

determination of tariff for second control period. Accordingly, the High Court has directed that the existing tariff shall continue till disposal of appeal of DIAL by AERAAT. Hence, the current order of AERA cannot be implemented until final outcome of that appeal,” Delhi Airport said.

Expansion of Delhi Airport

Following incessant complaints by passengers, the Delhi International Airport Ltd (DIAL) is working on a plan to decongest its domestic terminals, 1D and 1C, used by lowcost airlines and expand facilities to meet the projected traffic growth to 100 million by 2033. Of this, 70 per cent of the traffic will be in the domestic segment. Delhi Airport, the busiest in the country, handled 41 million passengers in 2014-15. About 26 million were handled at the T3 terminal and the rest at T1. While T3 is designed for a capacity of 34 million annually, T1 can handle 16 million. The latter, used by IndiGo, GoAir and SpiceJet, is reaching saturation point. Terminal 1 will be eventually expanded to handle 30 million passengers annually. The immediate plans include creation of additional boarding gates, bus piers and extra security frisking counters. Traffic at Delhi Airport has grown 70 per cent in seven SP’S AIRBUZ • ISSUE 1 • 2016 • 5

NewsBriefs

years. It handled 24 million passengers in 2007-08. During the period, domestic traffic grew 63 per cent to 27.5 million and international traffic by 87.5 per cent to 13.5 million. A review of the 2006 plan has been done and a new one prepared. T1’s handling capacity is to be raised to 30 million and T3’s to 45 million a year. It will also see construction of a new terminal, T4, to handle 34 million domestic passengers and a fourth runway.

E-Boarding Facility at RGIA, Hyderabad

GMR group-run Rajiv Gandhi International Airport (RGIA) at Hyderabad has become the first airport in the country to offer e-boarding facility to domestic fliers. The in-house built e-boarding solution is in line with the ‘Digital India’ programme envisioned by Prime Minister Narendra Modi. The seamless facility, inaugurated by the Union Civil Aviation Minister P. Ashok Gajapathi Raju, covers all the boarding processes right from entry into the terminal building of the airport to boarding the aircraft. Fliers, however, would have flexibility to follow the traditional process of showing a photo-ID to gain entry into the airport in case the Aadhaar number is not available. Developed in-house, the e-boarding solution eliminates the need to manual stamping of boarding cards even for physical boarding cards issued by the common use self-service machines or the check-in counters. GMR Hyderabad International Airport Limited (GHIAL) is a four-way joint venture with GMR Group holding 63 per cent stake, while Airports Authority of India and Telangana holding 13 per cent each. The rest 11 per cent stake is held by Malaysia Airports Holdings Berhad.

Mangaluru Airport amongst the Best in the Country

period last year. The airport was given an overall rating of 4.75 on a five point scale. The 53 airports surveyed had handled up to 15 lakh passengers a year. The internal survey was done by a private agency for the Airports Authority of India. Cleanliness of washrooms and toilets of the airport was given a rating of 4.79, while cleanliness of terminal building stood at 4.82. “This is a remarkable achievement for the airport,” he said in a release.

Traffic at Durgapur Airport

Things are looking up for the private airport at Durgapur after the flight from Kolkata, which went three-fourths empty for six months, was extended to New Delhi. Air India’s 42-seat ATR that flew between Kolkata and Durgapur made way for the 144-seat Airbus A319 which flew with just ten per cent of seats empty. Flights to Durgapur, which has several public sector undertakings and power-intensive industries, began in May 2019. Executives of these companies were expected to take the 45-minute flight from Kolkata. According to travel agents, mainly government officials flew between the two cities in West Bengal earlier. “It takes about three hours to reach Durgapur by road or rail. Considering an airtime of 45 minutes, check-in and check-out formalities and baggage clearance procedures, people did not opt for the flight,” a travel agent said. Durgapur airport enjoys a tax holiday on aviation turbine fuel for six years. Bengal Aerotropolis Projects Limited (BAPL), the developer of Durgapur airport, is in talks with private airlines for flights to Mumbai and other cities. Bhutan Airlines has shown interest in a technical stop at the airport. The industrial belt near the airport has a population of 11 million. Durgapur is connected to cities in West Bengal and Jharkhand, which may lead to a rise in air traffic from the new airport.

Security Policy for Airports

Mangaluru International Airport (MIA) has achieved the fifth rank in terms of customer satisfaction and handling among the 53 two-tier airports in the country. MIA Director J.T. Radhakrishna said the ranking was based on the customer satisfaction survey conducted during July to December 6 • SP’S AIRBUZ • ISSUE 1 • 2016

With some hypersensitive and sensitive airports still not under CISF’s specialised cover, a “concerned” Parliamentary Committee has called for a comprehensive aviation security policy before a “major untoward incident” takes place. The Parliamentary Standing Committee chaired by K.D. Singh, Member of Parliament, Trinamool Congress, said that there are “several gaps and lack of unified command and control over multiple agencies” involved in securing airports. The panel was surprised to note that eight out of 26 hypersensitive, 19 of 56 sensitive and

www.spsairbuz.com

12 out of 16 normal airports were not under the security cover of paramilitary force CISF, which has now become the “only specialised force” for aviation security. State police provides security for those not covered by CISF, which was deployed since 2000. At present, 18 hypersensitive airports like Delhi, Kolkata, Mumbai, Bengaluru and Amritsar are under the CISF cover. Some of the sensitive airports covered by CISF are Agra, Thiruvananthapuram and Patna. “Now the question is who is guarding these airports and how secure are they? In these existing threat perceptions at our airports, the country can ill-afford such a situation to continue anymore,” the panel said in its report entitled “Issues Related to Security at Airports in India”. Latest threat inputs on airports include use of surgically implanted explosives for interference in civil aviation operations, IEDs hidden in printer ink and toner cartridges, hijacking using trained pilots and forcible intrusion at smaller airports.

( MAINTENANCE, REPAIR AND OVERHAUL `700 Crore Public Offer by Air Works

Air Works, India’s oldest maintenance, repair and overhaul (MRO) firm in the private sector, is preparing for an initial public offering (IPO) to raise about `700 crore through issue of fresh shares and part stake sale by promoters and existing investors. A source said the company plans to use the proceeds for expansion and that the IPO is expected in about 12 to 15 months. Founded in 1951 by brothers B.G. Menon and P.S. Menon, Air Works is the largest MRO in India servicing charter and private jets. Over the past few years it has expanded business to other areas such as aircraft painting and asset management with acquisitions of companies in Europe and the Gulf region. Its overseas business now contributes about two-thirds of revenue. Last year, it acquired Irish firm Acumen Aviation, which focuses on data management solutions for aircraft owners and lessors. The Menon family owns about 14 per cent stake in Air Works and the rest is held by GTI Capital, Punj Lloyd, New Enterprise Associates, Elephant Capital and its CEO Vivek Gour. “It will be both primary and secondary share sale. The draft civil aviation policy with its tax concessions and other reforms, is favourable for the MRO sector and existing owners see value in staying invested in the company. SP

rendezvous

civil aviation minister

exclusive

PHOTOGRAPHS: Neetu Dhulia / SP Guide Pubns

Industry is Welcome: Union Minister of Civil Aviation P. Ashok Gajapathi Raju during the interaction

NEW POLICY AWAITING CABINET NOD 8 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

rendezvous

civil aviation minister

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964

Jayant Baranwal, Editor-in-Chief of SP’s AirBuz (accompanied by Neetu Dhulia) had an exclusive rendezvous with the Union Minister of Civil Aviation, P. Ashok Gajapathi Raju, during the second half of January this year. The interaction included wide ranging subjects pertaining to India’s civil aviation scenario. Some of them were the growth factor, 5/20 rule, regional connectivity, general and business aviation, cargo business and also the upcoming National Civil Aviation Policy. Excerpts: current scenario Jayant Baranwal (Baranwal): Could you give a quick perspective on the growth pace of our civil aviation industry? Civil Aviation Minister (Minister): The growth is reported to be around 20 per cent over the previous year; actually it’s a good growth. I think it is a reflection of the economy and it also gains from the economy. Civil aviation has benefited in the past one year. Of course, there are many factors and one factor that, I think, which is fairly important is the price of ATF (aviation turbine fuel) coming down, and that has been a stimulus. Baranwal: But in that case if ATF goes up, then what do you think? Minister: I don’t think it will go up now. It does not look as if it will go up. Baranwal: But there could be a possibility that it will eventually go up? Minister: You see, once you are born, death is eventual, but every day you don’t really think about it. The trends don’t show as if it will go up that way in the foreseeable future. You could say probably in this year, for instance, definitely, the trends don’t look in that direction. I am no expert there, so generally, I think there will be growth in passenger traffic.

Cargo is literally miniscule in our country and so it has scope not only for exports but also within the country. We have so many agro climatic zones and good markets, so probably if we can get the industry and the trade entrusted, I think transport can help there, that’s good if it happens, because I see an opportunity there. Baranwal: But don’t you want cargo industry to grow well? Minister: Yes, cargo industry needs a push, needs incentives and infrastructure. The world over, most airlines don’t make money from transportation of people, whatever they make it is from cargo. Baranwal: So that offsets the losses they are bearing? Minister: We hope they don’t go under losses. The world over that is happening in a lot of places and we can see that it can happen here. targeting healthy growth Baranwal: The DGCA (Directorate General of Civil Aviation) is yet to emerge as a progressive organisation as per the sentiments of the overall industry. What steps are being taken to make it more conducive to industry’s healthy growth? Minister: You see, the DGCA is a regulator and most regulators don’t endear themselves to people, but they can be transparent in their actions. Generally regulators don’t endear themselves to

Deep Rooted to Aviation: Civil Aviation Minister’s grandfather’s aviation licence issued on July 4, 1935; (right) the Raja (King) in a Tiger Moth aircraft

SP’S AIRBUZ • Issue 1 • 2016 • 9

rendezvous

civil aviation minister

“as far as the 5/20 rule, I think this is an impediment to the growth of Indian aviation. No other country in the world ever has this type of regulation.” trade because it will become a compromise in safety. They are opaque and they need to become transparent and they need to be faster and conducive to growth. A regulator is necessary. You can’t throw a baby out of the bath water once the bath water goes, the clean baby remains so, and that is how we would like to see the DGCA as a cleaner organisation. Those are the kinds of steps we are taking there to try to see the organisation modernises its thinking and pulls itself up. the 5/20 rule: DOESN’T LOOK RATIONAL

the 5/20 individually; I have voiced this at various forums too. So if I am able to convince my colleagues then it can go. mro will bring industry to india Baranwal: MRO: I believe the draft policy sounded very friendly to the industry – what all have been the plans to enable the growth in this area? Minister: MRO is one place where India has a lot to benefit. If we are able to bring in the policy, we will get the industry into India. Right now $700 million of Indian business is going to Singapore, Dubai, Sri Lanka and when you interact with them they are giving few things, one is the service tax and customs for the Government of India. We interacted with the finance and customs; they wanted time for spare parts to be changed to three years instead of one year right now. Currently, they get it, and if they consume it within one year and they don’t have to pay the duty. They are asking for three years time and in informal consultations, they seem to understand the problem. Also, the states will have to come out with their VAT problem, so if the Government of India does that, then probably this industry might move to states which are friendly. In Delhi, everyone is trying to bring down the ATF, the Delhi Government has hiked it to five per cent. So like that you do have things happening. MRO will help us to get back business to our country, with it our ‘Make in India’ will become more vibrant, we are working on that.

Baranwal: Air India has now withdrawn its objection on the 5/20 rule. Does this pave way for faster growth of India’s airline business? Minister: It’s okay some airlines object, some don’t. Ultimately, it’s the government to take a decision. Now why 5/20 was brought? ga/ba open to discussions What is the logic behind five years in 20 aircraft and who does it pull down? You can’t regulate foreigners, you only regulate your- Baranwal: It will save lot of money outflow from the self, for what purpose? It is a decision that did come out of the country. Regarding general aviation and business aviaCabinet, so any change it has to go back to them. Now politically tion, the industry still feels that they are being treated as speaking, almost no political party’s manifesto, regional or nation- a stepchild? al, has ever talked about aviation. There is a sentence in the BJP’s Minister: General aviation is interesting; we got some of their manifesto on regional connectivity, so we are trying to keep the re- reactions. Why is it that, what is it they want, what is it we can gional connectivity thing as sacrosanct, building the policy around do? Like if they say I want parking in a place like Mumbai, it is alit. Of course, as far as the 5/20 rule is concerned certain people af- ready congested. Like they say I don’t mind parking in a place like ter sometime will get used to a particular thing, it gives a comfort Bhopal, for instance, you have 12 aircraft you can park simultanelevel or call it a discomfort level. I think ously, no problem 12 big ones. What is this is an impediment to the growth of this they exactly want? Indian aviation. No other country in the Passenger Growth world ever has this type of regulation. I Neetu Dhulia (Dhulia): If they come am individually convinced and I hope to up with requisite solutions, would (Year over Year: 20.34%) convince my colleagues further. you be open to it? Minister: My god! I will welcome evBaranwal: And this will enable erybody. Why should I say no for it? 810.91 lakh much faster growth on the domes(2015) tic front. Dhulia: Would you welcome if the 673.83 lakh Minister: I think so, because impediindustry jointly wants to come and (2014) ments are removed. Now what is this voice their thoughts? that they are calling level playing field. Minister: You see voicing is okay, I went through hell so another fellow I even put the draft policy on the Inhas to also go through hell, otherwise ternet and requested, please respond it’s not a level playing field because I whether we agree or disagree. We can went through hell and he is not going always agree on something and disthrough hell. I don’t think that should agree on another thing, but we have to be acceptable logic here, we need to see understand your problem. that this industry grows. Someone will benefit, someone won’t benefit that’s Dhulia: If they raise the problem okay, but for eternity I don’t think we and seek the support, would the can doom the things. That’s what I feel government look into it addressing and everybody knows that I am not for Source: DGCA the issues? 10 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

rendezvous

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964

civil aviation minister

Silverlining: Minister believes that MRO will bring in more vibrancy within the industry with the help of ‘Make in India’ initiative

Minister: Why not if they can raise anything and I am sure we will look into it.

is that. Because, the economy appears to have behaved, your growths are there, otherwise it would not have been.

Dhulia: Could we be instrumental and bringing them together to have a discussion with them? Minister: If you are willing to send the ideas across we can try to understand them and then if we find it necessary we can always interact, after all we are Indians, we are not different countries warring with one another. So general aviation feels like a stepchild, why is that I need to know?

the `2,500 cap

GA/BA taxation

Baranwal: There has been some debate on that `2,500 cap. Minister: It’s not a cap, it’s not a floor, it’s a suggestion. Caps and floors are dangerous. Regional connectivity is what you are thinking. The Airports Authority of India (AAI) itself has about 30 airports un-served, even today. Now how do you start a service there? Otherwise, it’s a non-performing asset; we want them to become performing assets because they will contribute to the economy. How to do that, that’s the thing anyway, the work is going there.

Baranwal: The level of taxation they say on the aircraft is very high unlike any country in the world. Minister: Yes, that must be there, because generally scheduled airlines are given benefit because they are understood to be the common man’s way of transport. General aviation has probably given this impression that it is only rich man’s transport and that impression stays. So anyway whatever it is, they might be having other applications also, and we need to look at that. Baranwal: Yes other applications, the business expansion, moving from one point to the other, like a business tool, contributing back to the economy. Minister: Ultimately, aviation benefits from the economy. It also gives back to the economy. In that sense, aviation in general terms

Minister: Regarding “Regional Connectivity”, I told you already that this one is in the manifesto, we are kind of looking at it like a sacrosanct thing. That is why it’s in the policy we are looking at the certain suggestion which excited the thinking of many people, won’t it be possible to pay for an hour of flying at `2,500.

date of new civil aviation policy Baranwal: When can we expect the new policy? Minister: The new policy has now come to an advanced stage. One or two things that we are trying to iron out, then, it will go to the inter-ministerial consultation and then the Cabinet because certain decisions have come out from the Cabinet in the past. We would like to push it soon. SP SP’S AIRBUZ • Issue 1 • 2016 • 11

Show Preview

India Aviation 2016

India’s Civil Aviation Sector: Potential as Global Manufacturing and MRO Hub

(Left to right) Anil Srivastava, Joint Secretary, Ministry of Civil Aviation, Goverment of India; Pratyush Kumar, President, Boeing India; M. Sathiyavathy, Director General, DGCA; Jyotsna Suri, Immediate Past President, FICCI; P. Ashok Gajapathi Raju, Minister for Civil Aviation, Goverment of India; Amitabh Kant, Secretary, DIPP, Goverment of India; Palash Roy Chowdhury, Country Manager India, Pratt & Whitney at the launch of India Aviation 2016.

PHOTOGRAPH: FICCI

he Ministry of Civil Aviation, Government of India and Federation of Indian Chamber of Commerce and Industry (FICCI) are jointly organising the ‘India Aviation Conference-2016’ on March 17, 2016, at Hyderabad. The theme of this year’s event is ‘India’s Civil Aviation Sector: Potential as Global Manufacturing & MRO Hub’. Canada is the ‘Partner Country’ for the biennial event this year. Launched in 2008, the ‘International Exhibition & Conference on Civil Aviation’ is a two-yearly event. It has emerged as the largest platform for providing exciting opportunity for global players to tap immense opportunities in the fast growing Indian aviation market and for Indian players to interface with their global counterparts. The last four editions of India Aviation received tremendous response from international as well as national aviation stakeholders. This flagship aviation event is now firmly established as a key event on the international aerospace calendar, providing an excellent platform for developing business-to-business contacts. The ‘India Aviation Conference-2016’ provides an unmatched opportunity for the aviation players, all over the world, to debate on diverse topics relating to policy and regulatory regime, emerging challenges and opportunities, international best practices, etc. The conference brings together airport infrastructure developers/ operators, airlines, bilateral and multilateral agencies, the leaders of major manufacturers, suppliers and technology providers in the aerospace industry to discuss manufacturing capabilities and processes, best practices, advances and innovations, automation, industry trends and forecasts. It will be a full day event with four business sessions addressing the opportunities and challenges in the Indian civil aviation sector. Business Session 1: ‘Manufacturing and MRO. Changing Global Scenario’. This session will discuss strategies for making India an attractive ‘Aerospace Manufacturing and MRO’ destination globally and highlight the key opportunities available to the international aviation players in the Indian market. It will also focus on identifying possible solutions for 12 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

the technological and legislative challenges faced by the ‘Aerospace Manufacturing and MRO industry’ and developing the next-generation of workers to bridge the skill deficit in the aerospace industry. Business Session 2: ‘Enhancing Air Connectivity through Developing Future Infrastructure’. This session will identify the infrastructure, aircrafts and technology requirements for the sustainable growth of air transport industry; discuss the impact of multi modal and inter nodal transportation system on the development and growth of airports; highlight the role of modern technologies in the areas of aircraft operations, air traffic management systems, etc. Business Session 3: ‘Future Challenges & Emerging Opportunities in Air Cargo Industry’. This session will discuss issues relating to air cargo supply chain and overcoming restrictions preventing the air cargo industry from reaching its potential; modernising air cargo to improve cost-effectiveness and efficiency, etc. This session will also derive lessons and best practices from successful air cargo hubs around the world. Business Session 4: ‘Financing Air Transport. Challenges and Prospects’. This session would highlight the innovative financial techniques and methodologies to meet the growing financing needs; strategies for making Indian civil aviation sector an attractive investment destination; identifying possible solutions to challenges – high taxation regime and surveillance related issues, skill deficit, etc. – to ensure viability of the sector, etc. The conference promises to address the key challenges confronting the sector and promote an open dialogue among industry thought-leaders to innovate practical, sustainable solutions to boost growth of civil aviation in India. This year it would highlight the emerging investment opportunities in the Indian aerospace manufacturing market and building capabilities for promoting indigenisation of aerospace manufacturing and MRO services. SP

Interview

Boeing

exclusive

Right capacity or slight over capacity, but not over capacity is the solution for India

PHOTOGRAPH: Boeing

Boeing commercial airplanes are on a steady course and the US-based company has laid out its strategies in the world market in general and India in particular. In an interview with Editor-in-Chief Jayant Baranwal, the Senior Vice President of Boeing (Asia-Pacific & South Asia), Dinesh Keskar talks exclusively to SP’s AirBuz on how the company is going to expand its market share. Jayant Baranwal (Baranwal): How do you see the airlines industry in India moving at this point of time, particularly under the new government regime? Is it stagnant or growing or reversing...and why? Dinesh Keskar (Keskar): The new regime has been in place since May of 2014, so it’s been over a year-and-a-half. In my opinion it is clearly growing because you can see the steady stream of deliveries happening at many airlines. The bigger evidence of that is the highest growth rate that India is experiencing in both domestic travel and international travel to a certain extent. Domestically we are growing at the rate of 20 per cent which is phenomenal compared to anything now. The total number of passengers flying in India is still around 75-80 million domestically and whereas in China it is very smaller number but the rate of growth and the pro14 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

pensity of people to travel in their discretionary money available to travel, all of that clearly pointing towards growth. So I think, yes while I don’t see the new aviation policy in place I think what we have in terms of huge airports that have modernised over the last two years some in this regime, some before such as Mumbai, Delhi, Bengaluru and Hyderabad and of course started with Kochi as PPP (public-private partnership), I think the capacity has been created and the growth continues, people have the money to travel and the economic GDP growth in India will continue to grow. I know the goal is to get to over 9 per cent but we are certainly doing well right now and we are touching around 7 per cent and all this points clearly lead me to believe that in spite of some of our infrastructure constraints we are growing the fastest in the world. Even if you saw the rate of growth in December it was even

Interview

Boeing

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964

Bonhomie: SP Guide Publications CMD and Editor-in-Chief Jayant Baranwal with Dinesh Keskar

PHOTOGRAPH: SP Guide Pubns

higher at 25 per cent so all looks well towards the growth. It is mostly because of fuel price which is the fundamental reason why it is growing. The exchange rate is going in the reverse direction but what matters in India is the price which is based in dollars, multiplied by the exchange rate and that number is still going down and hence things will continue to get better. Baranwal: You will fully agree that India’s full potential is completely untapped? Keskar: Oh, I won’t say it is completely untapped but it is untapped. It relates to Tier-II and Tier-III cities and airports as well. Our potential largely depends on going from metros to the secondary cities and even at some point in time the tertiary cities which you call Tier-II and -III. I think what is going to be required for this continuous explosive growth to sustain is to get flights between Tier-II, Tier-III and within Tier-II and Tier-III now. Within Tier-II it is fairly quickly possible, within Tier-III is going to take at least another five to seven years. For example, flights between Nagpur and Lucknow, I consider both of these airports as Tier-II airports, there is enough operations around them and traffic of five million plus and yet there are no direct flights in such cities. There are many such Tier-II cities where the airports already exists and we feel that once the airlines start offering flights the market will develop. The market won’t develop overnight but certainly there is potential for the next growth to come from these Tier-II cities. Right now most of the metros are linked to the TierII cities but now we need to start getting flights within the TierII cities. That is where the untapped potential is going to come from. Passenger is coming on to the airplane but I think a lot of that migration has happened which is what has led to the all-time high growth of 20 per cent in the Indian domestic market. I think there is still potential but.

I must tell you that I have been watching carefully the improvement under the leadership of Railway Minister Suresh Prabhu on getting better trains, better on-time, better facilities for the train travellers and all that is going to play a balance. Let me tell you that there is enough to go around for both the aviation market and continued prosperity of the railway passengers. What is going to make the difference is going to be, what kind of money I have available and what is my profile. What I mean by that is if a family of four is going on a vacation and it can afford to go by paying additional money on the airplane and saving several hours or they would rather prefer to save the money and take 15 hours of train journey, these two options are not with us. There is going to be both kinds of people and that’s where the growth will continue and I think to separate your second question on the untapped potential, it is there and it is going to happen with some transition of railway passengers but more of flights between TierII and -III cities and at some point of time from Tier-II to -III cities in the future. Remember for Tier-III, a lot of infrastructure and improvement is needed and that is why it is going to take five to seven years as many do not even have good airports right now. Baranwal: Dinesh, can you give some ideas how to sustain and grow the transformation of railway passengers to become air travellers? Keskar: That is going to only happen, Jayant, if they sell a few seats on each flight at a low price. All airlines are offering good fares but offer it to few seats on each flight or on flights which they know are not going to be filled up by the time the day of travel comes up. It is those seats when a traveller sees a good fare, for flights advertised for as low as `2,500. I am not saying on a Mumbai-Delhi flight but there are flights in that range those are the ones that are going to be attractive for a railway passenger to SP’S AIRBUZ • Issue 1 • 2016 • 15

Interview

Boeing

shift from railways to the airlines for two reasons—novelty and speed. These are the reasons that the shift will continue. It is not going to continue if the Mumbai Delhi fares stay at a minimum of `6,000 or `7,000 all the time and the other fares stay in line. For example if you have a 10-hour journey from Nagpur to Mumbai which I have done a few times and on that if you charge a fare of more than `4,000, chances are that no railway passenger is going to shift to pay about `4,000. The affluent people are paying about `2,200 for first class AC and I think they have a tendency to shift if they do advance booking and fly for about `3,000. They are able to fly for about one-and-a-half-hour instead of about 12 hours by train. Some people will always like going by train and some people will always value time. All these pragmatics will come into play but nonetheless no matter what each segment will be represented and that you won’t have an issue of growth in the traffic. Baranwal: What do you think is the solution to serve smaller cities? Tier-II and -III destinations in terms of capacity build up, in terms of the size of the aircraft and so on? Keskar: In particular the Airports Authority of India (AAI) has done a reasonably good job in terms of Tier-II cities getting airports ready and a significant number of airports that have been improved and there are more to be improved in the Tier-II level. In the Tier-III level you need to improve not only the airport itself, the runways, the facilities, the navigation, the ATC towers. All of that is going to come into play and when that is happening, you clearly need all the help you need to get not only from

“If you look at delivery share in India right now, it does not take much to figure it out, we are pretty comfortable of 50:50 share on the standard-body or narrow-body market and very dominant market share in widebody” the government, AAI and but potentially from privatisation—the public-private partnership will continue and that is what is going to happen. So a lot of money will be needed for that. It will all not come from AAI, but will come from other sectors, other people. The state governments have a role to play in this kind of a situation because they will be benefiting from that. For example, in Maharashtra besides three of four airports, there are other airports that are not doing that well. Baranwal: What kind of mix of capability build-up is advisable for India which is an evolving market as you know— maximum number of seats versus optimum number of seats and overcapacity versus right capacity? Keskar: Exactly, Jayant, I have been very vocal on this point. The overcapacity is what has led to significant troubles for India in 2008-10 when the fuel prices went out of the roof. We are in a fortunate position right now because operating costs have come down significantly mainly because of the fuel component. It used 16 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

to be 40 to 45 per cent of the total costs and now has come down to 20 per cent. If you have overcapacity and then you will get into a fierce fare war. I don’t consider what is happening today as a significant fare war. It is there and the airline is trying to establish the market, and they are doing a few things but it is not a fare war to be concerned. But if you have overcapacity and a passenger is being faced by five other airlines clearly the fares are going to go down and they may go down below the cost that is when we need to watch carefully. I am a firm proponent of adequate capacity not overcapacity. Yes, airlines can have four or five per cent additional capacity and some seats can be sold at low fares to attract first time travellers than having overcapacity which is going to be a problem. The solution for India is really the right capacity or slight overcapacity not overcapacity. Baranwal: What kind of future do you foresee in the context of airline operations with the fuel prices which are currently quite down now but definitely may go up? Keskar: Of course they will go up, not in the foreseeable future. What I mean is that in the next six to 12 months, nobody is expecting fuel prices to go higher than 50 or so. In that environment I think people can try growth, people can try new markets by connecting Tier-II cities. That is what is possible in terms of experimentation in a low operating cost environment. You cannot play these scenarios when the fuel prices are high, cannot take risk to fly an aircraft like a 737 which can take up to 180 pax. In today’s market where you build a route is you start with a 100-seater and then you build a route and you eventually become a 737 route and that is what somebody like SpiceJet can do with the Q400 and then build that route and hand it over to a 737. We don’t have very many small airplanes in India and because of that having a low fuel price will allow us to develop some markets in a low fuel price environment which would not have been possible otherwise. Baranwal: So you agree that some role can be played by aircraft which is not more than 100-seater capacity? Keskar: Absolutely. We have always said that about the aircraft below 100-seater. By the way we don’t make planes below 737/100 and to match Airbus A319. Below that is a wide open market. There is a lot of crowding in the below 100-seater, the Chinese are entering that market, the Japanese with MRJ, the Russians with SSJ, of course Bombardier is in that market and so is Embraer. And all these people, we feel their presence is needed as you cannot start with 150 or 180 passenger airplane. You just won’t get that kind of traffic on the first day. These airplanes are complimentary to us. You may have seen in our forecast that we don’t predict that there is room for many planes in this segment as they have range limitations. When they are flying distances of one, one-and-a-half hours, we do have roads and trains. We have to take into account going to airport one hour earlier, going through security, waiting for the airplane and then take off and at the other end, getting down, waiting for baggage and the travel back, and the amount of time that you are taking is going to be substantial. That is when train or road will come into play. It is why we believe that not many of these will have a market in India. Baranwal: Any comment you would like to make on the price war which continues to take place in India. Does it really make business sense, Dinesh, after all? Keskar: Clearly nobody can make money on a sustained basis below cost. But what I am also observing that when I go online to

Interview

Boeing

check prices I literally never find flights available at that price, number one and what that means that they may be selling five seats out of 180. I don’t know the exact number as I don’t know the airline revenue management, but they are selling handful of that to attract people. Revenue management is not what we see in US or Europe or Asia, these guys are trying to attract people to come on their web and if the passenger sees `2,000 fare and ends up as a `2,700, the passenger says he is okay with the additional `700 spend. That is how things are working but you are a savvy aviation person. You have finished 50 years in the industry and you know the business well. You can go on the website today and compare with the advertisement, you will be lucky to buy one ticket on those prices advertised. They are available but it gets filled up within five minutes of that fare coming in. It will be all gone, very quickly. Baranwal: What kind of positioning Boeing is willing to have in India in view of the market dynamics evolving so fast? Keskar: Look, we have been quite pleased with our wide-body placement in India. If you remember Air India was predominantly 747 then subsequently they became 777 and 787 today, that is their whole suite. Look at Jet, they do have some A330s on lease and they have predominantly 777 and 787. These are the only two airlines today who are flying internationally long haul. We feel our positioning in the wide-body market in India is absolutely wonderful and our market share is very high. When you come to the 737 and A320 type of market, in terms of delivered airplanes we have a reasonably good market share. I know that there has been a lot of talk about IndiGo buying 250 now and 180 and those are airplanes they are buying are for the next 10 or 15 years. Jet has not placed any order for the next 10 or 15 years, Air India has not placed an order, neither has SpiceJet though they are in talks for that. Jet has recently ordered 75 Max recently at Dubai Airshow. SpiceJet has orders placed two years ago at India Aviation. So we are predominant in the narrow-body market. We are also putting more airplanes this year into Air India Express. If you look at the numbers announced worldwide and not just India where in our delivery share was much higher than Airbus though Airbus sold more planes in 2015. The point I continuously make to people like yourself who are sophisticated journalists, who understand this, is that at the end of the day orders are orders and deliveries are deliveries. Deliveries are the one you can take note and bank it. I mean if you go on to the Airbus website, which I did yesterday when I was travelling from US to here, I noticed that the Kingfisher order is still on their books for the narrow-body. And when they speak of their market share, they add it. I am not picking on Kingfisher, but I am giving an example. You and I know the probability of delivering those airplanes and we know that the airline is not going to take that order. If you look at our balance of deliveries you clearly see that these are deliveries. The bottom line is there is one thing on order and of course I am not saying anything negative on orders, people like Singapore, Qantas, Cathay, ANA and all when they order, always without exception they take deliveries of those airplanes. But in India we have seen Kingfisher order A330s, A340s and you know how many of those really came to India, and all the journalists wrote about it and at Paris Airshow one year, there was blitz of all these. If you look at delivery share in India right now, it does not take much to figure it out, we are pretty comfortable of 50:50 share on the standard-body or narrow-body market and very dominant market share in wide-body. I think we have pretty good positioning of the Max coming to the market soon. The 787 reliability has stabilised in India today. About 1,350 to 1,400 flights a month with the 787 now

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 and reliability is close to 99 per cent which is approaching world average. So we feel very good in our positioning and market dynamics. Of course, our scope is growing and we are looking at over 1,740 airplanes worth $240 billion with wide-body and Max coming on line and in the future we are looking at new middle of the market airplane and all of that will position us very well in the Indian market. Baranwal: Dinesh, how would you view the progress of IndiGo in India? Keskar: I cannot comment on that as I am not aware of what they do, but I am absolutely impressed with the way they run the operations, I am impressed with the growth they are experiencing and I believe they have reached now 100 airplanes, right and it is phenomenal. I don’t know their facts well, but they have done a great job for the Indian aviation and for India and they run a very good business. Baranwal: How do you position the 787 in the next 10-15 years? And also we hear of reports here and there of minor problems on 787? Keskar: Jayant, you are a sophisticated guy. Even the best of airplanes have 99.6 to 99.8 reliability what that means is that four out of every 1,000 flights you are going to hear something. And literally we have thousands of flights every day. Air India is doing 1,400 flights a month. When you do 1,400 flights a month and have a dispatch reliability with around 99 per cent, simple maths will tell you are going to have about 10 to 15 flights where you are going to have a snag. It is a high number and we are continuing to work on that and our goal is to get at 99.2 and eventually at 99.4, so when you have these three or four flights, most airlines in the world, including United and if it is delayed nobody writes about it even if there is a delay of eight hours. It’s not a story in the US as there are so many flights every day. In India, I am sure even IndiGo does not run 100 per cent dispatch reliability, neither does Jet, but whenever something happens to Air India it gets written. I don’t think so it is out of the ordinary and it will continue to happen. We will continue to work with Air India to make sure that their reliability gets higher and higher but we don’t expect that they will run or any airline in the world will run 100 per cent of the flights on time in the next 15 years. Baranwal: How many 787 do you expect in the next 15 years flying in India? Keskar: As you know, 21 are flying today, six are scheduled for deliveries in the next two years and Jet has 10 more, clearly 37 at least in the next five years and as they get ready to order the next batch, we will have to look at it. But if you have seen our forecast of 1,740 new aircraft, about 300 in that category, in the next 20 years are going to be in the wide-body which we dominate. There is not a single A350 order in India, there isn’t a single A330neo order in India, clearly we will have the lion’s share of the wide-body market going forward. We don’t speculate what airlines will order. I am giving you the facts. For your information that 37 units of 787 and a total of 30 units of 777 have been delivered in India the last few years and will be delivered in the next five years. Today, Jet flies, as you know, 10 numbers of 777. Air India will soon get the three brand new airplanes which they have deferred till 2018. The deliveries of wide-body aircraft from Boeing continues to happen. I won’t give you numbers for the next 10 or 15 years, but I am giving you the 37 and 30, that is 67 wide-bodies of Boeing will be delivered in India because they are contractually there. I don’t see a whole lot of activity on the Airbus side in the wide-body market. SP SP’S AIRBUZ • Issue 1 • 2016 • 17

Engines

Pratt & Whitney

PERFORMANCE EXTRAORDINAIRE The Pratt & Whitney PW1000G is a high-bypass geared turbofan engine family, currently selected as the exclusive engine for the Bombardier CSeries; Mitsubishi Regional Jet and Embraer’s next-generation E-Jets and as an option on the Irkut MC-21 and Airbus A320neo. by R. Chandrakanth

PHOTOGRAPH: Pratt & Whitney

PW1000G engine cross section

n January 20 this year, the first Airbus A320 neo (new engine option) was delivered to Lufthansa, marking a major step in aviation history. The A320neo is said to be the world’s bestselling and most fuel-efficient single-aisle aircraft. Equipped with all new technology Pratt & Whitney PurePower Geared Turbofan engines, the A320neo sets a new, even higher standard in aircraft efficiency, reducing emissions and noise as well as burning 15 per cent less fuel than current generation aircraft from day one and 20 per cent by 2020. 18 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

“We are happy that today we are the first airline worldwide to receive the Airbus A320neo. Featuring the leading technology of Airbus and Pratt & Whitney, the A320neo is by far the most efficient and most silent aircraft on short- and medium-haul routes. With lower fuel consumption and consequently lower CO2 emissions, the A320neo has a clearly improved environmental performance. Furthermore, the new jet engine technology makes the aircraft considerably quieter. As a result, we have ordered a total of 116 aircraft of this type for the airlines of the Lufthansa Group”, states Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG.

Engines

Pratt & Whitney

Pratt & Whitney congratulated Lufthansa as the launch customer for the A320neo aircraft powered by PW1100G-JM engines. Robert Leduc, Pratt & Whitney President, said: “Airbus and Lufthansa have been important customers for Pratt & Whitney for many years. With the A320neo’s unprecedented reductions in fuel burn, emissions and noise, I am confident that these business relationships will have continued success for many years to come.” On Regionals and Single-Aisle Aircraft. The Pratt & Whitney PW1000G is a high-bypass geared turbofan engine family, currently selected as the exclusive engine for the Bombardier CSeries; Mitsubishi Regional Jet (MRJ) and Embraer’s next-generation E-Jets and as an option on the Irkut MC-21 and Airbus A320neo. The project was previously known as the geared turbofan (GTF) and originally the advanced technology fan integrator (ATFI). The engine is expected to deliver reductions in fuel use and ground noise when used in next-generation aircraft. Pratt & Whitney first attempted to build a geared turbofan starting around 1998, with the PW8000. This essentially was an upgrade of the existing PW6000 that replaced the fan section with a gearing system and new single-stage fan. After several years of development the PW8000 essentially disappeared. Soon afterwards the ATFI project appeared, using a PW308 core but with a new gearbox and a single-stage fan. It had its first run on March 17, 2001. This led to the GTF programme, which was based around a newly designed core jointly developed with MTU Aero Engines of Germany. The German company provides the high-speed low-pressure turbine and various stages of the high-pressure compressor. Christened ‘PurePower’. In addition to the geared turbofan, the initial designs included a variable-area fan nozzle (VAFN), which allows improvements in propulsive efficiency across a range of the flight envelope. However, the VAFN has since been dropped from production designs due to high system weight. In July 2008, the GTF was renamed PW1000G, the first in a new line of ‘PurePower’ engines. Pratt & Whitney claims the PW1000G is 10 per cent to 15 per cent more fuel-efficient than current engines used on regional jets and single-aisle jets as well as being up to 75 per cent quieter. The engine was tested on the Pratt & Whitney Boeing 747SP and the second phase of flight testing for the PW1000G was conducted on an Airbus A340-600. The test-bed aircraft, with the engine in the number two pylon position, flew for the first time in Toulouse on October 14, 2008. The PW1100G was first tested on the 747SP in 2013. Testing of the PW1524G model began in October 2010. The PW1500G engine successfully achieved Transport Canada type certification on February 20, 2013. The PW1100G engine successfully achieved the Federal Aviation Administration (FAA) type certification on December 19, 2014. The first flight test on one of its intended production airframes, the Bombardier CS100, was on September 16, 2013. The first flight of the Airbus A320neo followed on September 25, 2014. The fourth variant of the engine, the PW1900G, first flew on November 3, 2015, from Mirabel in Canada fitted to the Boeing 747SP test aircraft. And the first delivery to a commercial operator occurred on January 20, 2016, to Lufthansa, instead of Qatar Airways due to an issue of uneven cooling in the engine. Game-changing benefits. With 20 years of research and development, component rig testing on all major modules, extensive ground and flight testing of a full-scale demonstrator engine complete and extensive ground and flight testing, the

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 PurePower PW1000G engine with geared turbofan technology delivers game-changing reductions in: l Fuel burn l Environmental emissions l Engine noise l Operating costs In the PurePower PW1000G engine family, a state-of-the-art gear system separates the engine fan from the low pressure compressor and turbine, allowing each of the modules to operate at their optimum speeds. This enables the fan to rotate slower and while the low pressure compressor and turbine operate at a high speed, increasing engine efficiency and delivering significantly lower fuel consumption, emissions and noise. This increased efficiency also translates to fewer engine stages and parts for lower weight and reduced maintenance costs. The PurePower PW1000G engine’s fan-drive gear system is just one component of this next-generation engine. The PurePower PW1000G engine also incorporates advances in aerodynamics, lightweight materials and other major technology improvements in the high-pressure spool, low-pressure turbine, combustor, controls, engine health monitoring and more. Shaping future of aviation. Pratt & Whitney has been actively testing all key components of the PurePower PW1000G engine family, with 16 technology rigs running around the world. In 2008, Pratt & Whitney’s full-scale demonstrator engine completed its rigorous 400-hour ground and flight test programme with test results that indicated the engine delivers the performance and efficiency targets of this revolutionary technology. Hundreds of hours of ground testing of the first PW1500G engines for the Bombardier CSeries and PW1200G engines for the Mitsubishi Regional Jet further validate the engine family’s many benefits. Earns laurels. Pratt & Whitney’s PurePower PW1000G engine has been recognised by Popular Science magazine with a 2009 “Best of What’s New Award.” In addition to the Popular Science award, Pratt & Whitney’s PurePower engine family also received the 2009 Aviation Week Laureate Award for outstanding achievement in Aeronautics and Propulsion and the 2008 Technology Breakthrough Award from the China Aviation Association and AVIC Science and Technology department. PurePower engine was cited as an Aviation Climate solution by the Air Transport Action Group (ATAG) at the Global Sustainable Aviation Summit in Geneva, Switzerland. The GTF’s engine technology reduces commercial aircraft fuel and carbon dioxide emissions, reduces regulated emissions by over 50 per cent and will reduce CO2 emissions at a level equivalent to planting nearly one million trees or removing three million cars off the road – every year. The engine reduces the aircraft noise footprint by more than 75 per cent. The GTF is included as part of the Aviation Climate Solutions, a collection of 100 examples of collaboration within the aviation industry to cut carbon dioxide emissions and help reduce its impact on climate change. “Aviation plays a vital role in the world economy, providing connectivity for people and business,” said Michael Gill, Executive Director, ATAG. “Our industry has also taken a lead in climate action, putting in place a comprehensive framework and goals to reduce emissions from air transport. The Aviation Climate Solutions are a set of case studies showing how different parts of the industry all over the world, including Pratt & Whitney are working together to reduce our climate impact.” SP SP’S AIRBUZ • Issue 1 • 2016 • 19

Environment

Biofuel

Green diesel is among more than 25 new technologies being tested by Boeing’s ecoDemonstrator Program aboard 787 Dreamliner ZA004

PHOTOGRAPH: Boeing

BIOFUEL, THE NEXT ALTERNATIVE Research has shown that, on a full carbon life cycle basis, using the equivalent quantity of some alternative fuels could reduce CO2 emissions by around 80 per cent compared to the jet fuel they replace by R. Chandrakanth 20 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

Environment

Biofuel

n 2008, the first biofuel flight in a commercial aircraft took place. Virgin Atlantic carried out the world’s first flight of a commercial aircraft powered with biofuel, to show that it can produce less carbon dioxide than normal jet fuels. “This breakthrough will help Virgin Atlantic to fly its planes using clean fuel sooner than expected,” Sir Richard Branson, the airline’s President, said before the Boeing 747 flew from London’s Heathrow Airport to Amsterdam’s Schiphol Airport. The flight was partially fuelled with a biofuel mixture of coconut and babassu oil in one of its four main fuel tanks. The jet carried pilots and several technicians, but no passengers. The efforts are on and the future looks bright, considering that biofuels are being seen as the alternative. In 2011, a Boeing 737-800 carrying 171 passengers on KLM flew from Amsterdam to Paris with the airline becoming the first in the world to operate a commercial flight on bio-kerosene (cooking oil, Jet-A mix). The biofuel portion of the fuel mixture that KLM used for this latest flight was not derived from the camonila or jatropha plants. (The plants have earned attention for their high oil content and low agricultural impact.) KLM used a cooking-oil-based fuel produced by Dynamic Fuels, a joint venture between Syntroleum and Tyson Foods. KLM’s bio-kerosene was created from non-food-grade animal fat supplied as a byproduct of Tyson Foods meat processing plants. That product was refined into biofuel by Dynamic Fuels. Virgin Atlantic, British Airways and Continental have all flown commercial airliners fuelled, at least in part, with biofuels. Green diesel. In December 2014, Boeing completed the world’s first flight using ‘green diesel’, a sustainable biofuel that is widely available and used in ground transportation. The ecoDemonstrator 787 flight test airplane flew with a blend of 15 per cent green diesel and 85 per cent petroleum jet fuel in the left engine. “Green diesel offers a tremendous opportunity to make sustainable aviation biofuel more available and more affordable for our customers,” said Julie Felgar, Managing Director of Environmental Strategy and Integration, Boeing Commercial Airplanes. “We will provide data from several ecoDemonstrator flights to support efforts to approve this fuel for commercial aviation and help meet our industry’s environmental goals.” Sustainable green diesel is made from vegetable oils, waste cooking oil and waste animal fats. Boeing previously found that this fuel is chemically similar to HEFA (hydro-processed esters and fatty acids) aviation biofuel approved in 2011. Green diesel is chemically distinct and a different fuel product than ‘biodiesel,’ which also is used in ground transportation. With production capacity of 800 million gallons (3 billion litres) in US, Europe and Asia, green diesel could rapidly supply as much as 1 per cent of global jet fuel demand. With a wholesale cost of about $3 per gallon, inclusive of US Government incentives, green diesel approaches price parity with petroleum jet fuel. Testing aboard Dreamliner. Green diesel is among more than 25 new technologies being tested by Boeing’s ecoDemonstrator Program aboard 787 Dreamliner ZA004. The programme accelerates the testing, refinement, and use of new technologies and methods that can improve aviation’s environmental performance. On a life cycle basis, sustainably produced green diesel reduces carbon emissions by 50 to 90 per cent compared to fossil fuel, according to Finland-based Neste Oil, which supplied green diesel for the ecoDemonstrator 787. The flight test was

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 sustainably produced green diesel reduces carbon emissions by 50 to 90 per cent compared to fossil fuel coordinated with the US Federal Aviation Administration, RollsRoyce and Pratt & Whitney, and EPIC Aviation blended the fuel. The development of sustainable aviation alternative fuels could provide a very large part of the industry’s emissions-reduction strategy. Research has shown that, on a full carbon life cycle basis, using the equivalent quantity of some alternative fuels could reduce CO2 emissions by around 80 per cent compared to the jet fuel they replace. Second-generation feedstocks. The alternative fuels that are being investigated are second-generation feedstocks that can be grown or produced without negatively impacting food supplies, water or land use. Importantly, they are also ‘drop-in’ fuels which share the same properties as jet fuel which can be blended with the current fuel supply as they become available. Commercialisation and scaling up of the supply of alternative aviation fuels is the most important task faced for the researchers. Policymakers need to take steps to foster research into new feedstock sources and refining processes; De-risk public and private investments in sustainable aviation fuels; Provide incentives for airlines to use alternative fuels from an early stage; Encourage stakeholders to commit to robust sustainability criteria; Understand local green growth opportunities and Establish conditions encompassing all parts of the supply chain. The aviation industry has made it clear that it is only looking at second-generation biofuels and is determined not to repeat the mistakes made with first-generation sources, expecting any supply to be fully sustainable. The industry is working together through groups such as the Sustainable Aviation Fuel Users Group (SAFUG) and the Roundtable on Sustainable Biomaterials (RSB) to make sure that any fuels used by the industry are, in fact, sustainable. Initiatives around the world. There is a lot of work going on in the aviation industry (by airframers, researchers, interest groups, etc) around the world to help with the commercialisation of alternative aviation fuels. Some of them are Nordic Initiative for Sustainable Aviation (Denmark, Sweden, Norway, Finland and Iceland): Aviation Initiative for Renewable Energy (Germany); Commercial Aviation Alternative Fuels Initiative (USA); Alianca Brasileira para Biocombustiveis de Aviacao (Brazil); Brazilian Biojetfuel Platform; Australian Initiative for Sustainable Alternative Fuels; Midwest Aviation Sustainable Biofuels Initiative (USA); Sustainable Aviation Fuels Northwest (USA); Bioqueroseno (Spain); SEASAFI (South East Asia) and Biofuelnet (Canada). Advanced liquid biofuels, only option. Traditional jet fuel is a hydrocarbon, almost exclusively obtained from the kerosene fraction of crude oil. Two types of fuels are used in commercial aviation: Jet A and Jet A-1. For aviation, advanced liquid biofuels are the only low-CO2 option for substituting kerosene, as they have high specific energy content. Gaseous biofuels and electrification are definitely no option for air transportation. Advanced biofuels for aviation should use a sustainable resource SP’S AIRBUZ • Issue 1 • 2016 • 21

Environment

Biofuel

KLM is a pioneer to operate biofuel-powered intercontinental flights

to produce a fuel that can be considered as substitute for traditional jet fuel (Jet A and Jet A-1), while not consuming valuable food, land and water resources. A big challenge facing the use of biofuels in aviation is the high quality standards requirements. Safety and fuel quality specifications are of tremendous importance in the aviation sector, however, these are not limiting the use of biofuels. The technical requirements for aviation biofuels are: a high performance fuel that can withstand a range of operational conditions; a fuel that does not compromise safety; a fuel that can directly substitute traditional jet fuel aviation; a fuel that meets stringent performance targets set by ATAG.

PHOTOGRAPH: KLM

Sustainable feedstocks. Globally, various sustainable feedstocks and conversion technologies for production of biofuels for aviation are being developed. In the short-term, HEFA appears to be the most promising alternative to supply significant amounts of biofuel for aviation. In the medium term, the most promising alternative is said to be drop-in FT-fuels. The aviation industry is unlikely to rely on just one type of feedstock. Aircraft will be powered by blends of biofuels from different types of feedstocks along with jet fuel. Biomass sources for advanced biojet fuels include oil crops such as jatropha and camelina, waste fats and oils, and, in the longer term, biomass sugars, algae and halophytes. Demand for aviation fuels up. The demand for aviation fuels is expected to increase by approximately 1.5 to 3 per cent per year. There is policy at European Union level for the production and use of biofuels in the aviation sector and several initiatives established: The High Level Group on Aviation Research in Europe has set ambitious goals including a 75 per cent reduction in CO2 emissions and a 90 per cent reduction in NOx emissions per passenger kilometre in 2050. The International Air Transport Association is committed to achieve carbon-neutral growth starting 2020 and a 50 per cent overall CO2 emissions reduction by 2050. 22 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

Accelerating R&D efforts. The European Commission in coordination with Airbus, leading European airlines (Lufthansa, Air France, KLM and British Airways) and key European biofuel producers (Neste Oil, Biomass Technology Group and UOP), launched an initiative to speed up the commercialisation of aviation biofuels in Europe. And the European Advanced Biofuels Flight Path is a road map with clear milestones to achieve an annual production of two million tonnes of sustainably produced biofuel for aviation by 2020. The Biofuels Flight Path initiative is a shared and voluntary commitment by its members to support and promote the production, storage and distribution of sustainably produced drop-in biofuels for use in aviation. At present several hurdles prevent commercial deployment of advanced biofuels: lack of reliable overall biofuel policy, lack of policy incentives for aviation biofuels, lack of long-term offtake agreements between the biofuel producers and the aviation industry, and lack of financing. To help address this, a number of European Commissionfunded R&D projects have been initiated to map a way forward for the introduction of sustainable biofuels to help reduce dependence on fossil fuels in air transport and reduce GHG emissions by the air industry. The Flightpath 2050, Europe’s vision for aviation, has set these goals: (a) In 2050, technologies and procedures available allow a 75 per cent reduction in CO2 emissions per passenger kilometre to support the Air Transport Action Group (ATAG) target, and a 90 per cent reduction in nitrogen oxide emissions; (b) Aircraft movements are emission-free when taxiing; (c) Air vehicles are designed and manufactured to be recyclable; (d) Europe is established as a centre of excellence on sustainable alternative fuels, including those for aviation, based on a strong European energy policy. However, the costs of biofuels need to come down substantially and permanently which can be achieved through innovation, collaboration and the right legislation that stimulates biofuel in the airline industry. SP

air safety

Drones

(Left) Blighter AUDS Anti-UAV Defence System; (right) Draganflyer-X4P

PROLIFERATION OF UAVs: CAUSE FOR CONCERN? The commercial allure of UAVs has led to an inexorable and uncontrollable proliferation; a problem that could have been nipped in the bud is now a burgeoning plantation with branches mushrooming every minute by A.K. Sachdev

S PHOTOGRAPHS: Blighter, Draganfly

pecialists in aviation safety tempered to anticipate accidents are beginning to be increasingly concerned about the impact of proliferation of drones on air safety. The commercial allure of unmanned aerial vehicles (UAVs) has led to their inexorable and uncontrollable proliferation; a problem that could have been nipped in the bud is now a burgeoning one. Partly due to commercial pressures partly due to the desire to draft comprehensive and all-inclusive stipulations about drones, aviation regulators across the globe have been sluggish in formulating policies. With each passing day, it is becoming increasingly difficult to devise mechanisms to harness what appears to be a mushrooming epidemic. The longer that drone use defies or circumvents existing rules, the tougher it will be to finally rein in the users.

Safety and Security Concerns. Last year, an unidentified object, believed to be a drone, had a ‘near miss’ with an Airbus A320 passenger jet approaching London’s Heathrow airport. The pilot reported seeing a “rectangular propeller-driven” machine which came as close as 50 feet from his aircraft as it was descending through 1,700 feet. At that altitude, an impact with the drone or ingestion into one of its engines could have been disastrous for the airliner and those onboard. Neither the owner nor the operator of the drone was found. Such ‘near misses’ with 24 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

potential catastrophic consequences have been reported the world over and are rising alarmingly. Last December, researchers at the US-based Bard College studied 922 drone incident reports filed with the Federal Aviation Administration (FAA) over the past two years to analyse near-collision instances between drones and commercial planes. While the study did not find any case of collision between drones and manned aircraft, it found 327 close encounters of which 241 were classified by the FAA as ‘near collision’ incidents. In 28 of those instances, pilots had to evasively change course to prevent impact with a drone. A disquieting figure is that there were a total of 51 incidents in which drones were found in prohibited areas around airports. The number of incidents in 2015 was about three times more than that in 2014. Possibly these ‘near misses’ were as much of a surprise for the pilot of the aircraft as for the drone operator. However, one shudders at the thought of a determined terrorist intent on downing an aircraft to gain instant publicity. All that he would require is a drone costing infinitesimally less than a commercial airliner. The shanty town on the approach path of Mumbai airport affords such a terrorist a launch base from where he can fly a drone into an airliner approaching to land. In India, there have been a couple of incidents at the Delhi airport wherein ‘unidentified objects’ were reported flying in close proximity to the airport which supports substantial civil aircraft and is collocated with a military airbase. The objective of those flights is

air safety

Drones

uncertain; but the safety and security ramifications are clear for all to see. Drones have been found flying over other airports and near other defence installations as well and, in a recent incident, a drone was found flying near Vijay Chowk in New Delhi. A drone fitted with a camera could photograph or videograph the airport airside or a defence or other sensitive installation which is otherwise protected so robustly on the ground from mala fide human intent. Worst still, instead of a camera, the drone could carry a weapon or an explosive device. The possibilities are endless and definitely disturbing. Who is to Regulate Flying by Drones? For three days bracketing the Republic Day celebrations, Bengaluru city Police Commissioner banned the flying of UAVs including balloons in the city airspace. Curiously, the regulation invoked was Section 144 of the Code of Criminal Procedure, 1973. Section 144 deals with “power to issue orders in urgent cases of nuisance or apprehended danger.” It is clear that this expedient became necessary as there is no regulation governing the flight of drones. Occasionally, the media can be found indirectly blaming a state government for not regulating drones. So who should regulate them? Drones use the airspace to operate in three dimensions. Thus, their movements fall under the purview of the Directorate General Civil Aviation (DGCA), the aviation regulator charged with safety in the airspace above Indian territory. However, before we look at what DGCA has done in this regard, there is the question of defining what a drone is so that we know what is being regulated. The size of today’s drones varies from barely visible objects to huge vehicles flying for hundreds of hours even beyond the troposphere. Internationally, some of the terms used to describe flying objects not carrying a human pilot are unmanned (or unpiloted) aerial vehicle (UAV), unpiloted air system (UAS), remotely piloted aircraft (RPA), drones and aero-models. The International Civil Aviation Organisation (ICAO), the UN agency relevant to civil aviation, issued Circular 328, entitled ‘Unmanned Aircraft Systems (UAS)’, which defined unmanned aircraft as an aircraft which is intended to operate with no pilot onboard and a UAS as an aircraft and its associated elements which are operated with no pilot onboard. The term remotely piloted aircraft is used by the ICAO to define an aircraft piloted by a licensed “remote pilot” situated at a “remote pilot station” located external to the aircraft (i.e. ground, ship, another aircraft, space) who monitors the aircraft at all times and can respond to instructions issued by air traffic control (ATC), communicates via voice or data link as appropriate to the airspace or operation, and has direct responsibility for the safe conduct of the aircraft throughout its flight. Thus, RPA is a subset of unmanned aircraft and so, while UAS is used by ICAO as an all-encompassing term, RPA is only the piloted part of UAS. However, away from the technicality of terminology, any flying object except manned aircraft tends to be referred to as ‘drone’. The ICAO is yet to publish any standards and recommended practices (SARP) in respect of use of UAS. The initial SARPs is expected by 2018 and the whole machinery should be in place by 2025.

Drones have been found to be flying over other airports and in the vicinity of defence installations as well

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 The DGCA is yet to put into place a regulatory framework for use of drones. It issued a public notice on October 7, 2014, which informed all thus, “The DGCA is in the process of formulating the regulations and globally harmonise those for certification and operation for use of unmanned aircraft systems in the Indian civil airspace. Till such regulations are issued, no non-government agency, organisation or an individual will launch a UAS in Indian civil airspace for any purpose whatsoever.” A subsequent regulation is yet to be put into place while public awareness of the above quoted public notice is a big interrogation mark. Even those who are aware of the notice seem also to be cognisant of the fact that DGCA does not have the manpower to ensure its implementation. Thus the widespread use of drones is increasing day by day. The Draft National Civil Aviation Policy circulated in October 2015 and awaiting final approval does not mention the word ‘drone’ or ‘UAV’ in its entire text. It would appear that a regulation may take time to be promulgated by DGCA on the use of drones. The Way Forward. Some of the major countries that have defined norms for operation of drones are the United States, Australia, New Zealand, Brazil, Canada, Turkey and Spain. Hopefully, the delay by Indian authorities to put a regulation in place is on account of their deep and analytic study of the pros and cons of these nations’ regulatory frameworks. In India, the DGCA’s October 2014 notice is valid but not enforced. It is thus still possible to import, buy, build or fly small drones in India, despite the ban by DGCA. In the absence of a multi-ministry initiative, drones continue to be used blatantly and, unfortunately, with total disregard to air safety. Even when a DGCA regulation is in place, in all probability, this state of affairs will continue as it would be impossible for the DGCA, already short of manpower even for its current workload, to monitor, oversee and implement its own regulation. In addition to issuing a regulation, what needs to be done is to control the import and manufacture of drones. If the availability of drones to a populace that is not sensitised to air safety is restricted, it can be the first step towards ensuring air safety related to drones. Making it mandatory to fit a GPS device in all drones could be the next step in controlling indiscriminate and profligate use of drones. The United States is looking at a regulation to make it mandatory for all drones above a certain weight, to be registered with the FAA so as to make it easy for the owner to be traced in case of a violation. In the UK, three firms have devised an anti-UAV defence system (AUDS) that detects a drone flying in sensitive airspace by radar, sights it via a camera equipped with thermal imaging capabilities so that it can be targeted visually and jams its control signal, making it unresponsive. In addition to regulation, this approach could be adopted to ensure that drones do not impinge on air safety. Conclusion. Drone operations primarily need to be seen as an airspace management challenge. However, simply putting a DGCA regulation in place is unlikely to deter the already huge number of persons, states, official government departments, security and police forces, commercial firms and other entities from continuing their use. A regulation is no doubt required, and that too as early as possible to stop the slide in process, but that would be just the beginning. Public awareness would have to be enhanced and other Ministries involved in controlling the thriving numbers of drones. Hopefully, we get it right before a drone becomes the major cause of a catastrophic aircraft accident in the Indian skies. SP SP’S AIRBUZ • Issue 1 • 2016 • 25

Industry

Regulations

CAPE TOWN CONVENTION AND ITS IMPLEMENTATION IN INDIA The Cape Town Convention supersedes the “Geneva Convention” on the International Recognition of Rights in Aircraft signed in Geneva on June 19, 1948

PHOTOGRAPH: Airbus

by Shriniwas Mishra

n November 16, 2001, 53 countries supported the adoption of Convention on International Interests in Mobile Equipment and Protocol to the Convention on Matters Specific to Aircraft Equipment. India deposited articles of accession to the Cape Town Convention and the Aircraft Protocol in Rome on March 31, 2008. Though India is a signatory to the Cape Town Convention, in the absence of any municipal law to give effect to the provisions of the Convention, repossession of the aircraft from India has been subject to Indian laws. The purpose of the Cape Town 26 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

Convention is to harmonise private laws in respect of financing, lease/sale of mobile equipment and ensure greater confidence and predictability through ‘a uniform set of rules’ guiding the constitution, protection, prioritisation and enforcement of certain rights in aircraft objects such as aircraft and aircraft engines. The Convention intends to establish primacy in matters within its scope relating to the creation, enforcement, perfection and priority of interests in aircraft objects. To the extent applicable, it supersedes the “Geneva Convention” on the International Recognition of Rights in Aircraft signed in Geneva on June 19, 1948.

Industry

Regulations

Provisions of the Convention. Cape Town Convention applies to airframes, aircraft engines and helicopters which constitute “aircraft objects” described as: l “Airframes” type-certified to transport up to eight persons or goods over 2,750 kilograms. l “Aircraft engines” with minimum 1,750 pounds of thrust if jet powered or minimum 550 take-off shaft horsepower if turbine-powered or piston-powered. l “Helicopters” type-certified to transport total of five persons or goods over 450 kilograms. Creation of the International Registry for the recordation of “international interests” relating to aircraft objects is central to the purpose of the Cape Town Convention. All security-type interests subject to Security Agreements, Lease Agreements and Title Reservation Agreements relating to uniquely identifiable aircraft objects known as “international interests”, may be recorded on the International Registry by reference to the manufacturer’s name, generic model designation and serial number with respect to such aircraft object. Subject to certain declared local priorities arising by law (not contract), such interests are accorded priority based upon the order of registration. To constitute an “International Interest” under the Cape Town Convention, such interest must relate to an aircraft object and be: l Granted by a Chargor under a Security Agreement. l Vested in a person who is a Conditional Seller under a Title Reservation Agreement. l Vested in a person who is a Lessor under a Leasing Agreement. l One of the prerequisites to the constitution of a valid International Interest or Contract of Sale covering an aircraft object is that the Chargor, Conditional Seller, Lessor or Seller, as applicable, must have the power to dispose of such aircraft object by Sale, Lease or Conditional Sale or by way of Security. Nature of the debtor specifically where it is “situated” and the state of registration of aircraft object are two connecting factors to decide on the applicability of the Cape Town Convention. The Convention applies at the time of the “conclusion of the agreement” creating or providing for an International Interest in an aircraft object, the Debtor i.e., the Lessee, the Chargor or the Conditional Buyer under an Agreement or Seller under a Contract of Sale, is situated in a Contracting State. The fact that a Creditor or a Buyer under a Contract of Sale, is situated in a non-Contracting State does not affect the applicability of the Cape Town Convention. A debtor or Seller is deemed situated in a Contracting State if any one of the following factors is applicable:  It is incorporated or formed under the laws of a Contracting State. Its registered or statutory seat is located in a Contracting State.  Its centre of administration is located in a Contracting State.  Its principal place of business is located in a Contracting State.

The fact that a Creditor or a Buyer under a Contract of Sale is situated in a non-Contracting State does not affect the applicability of the Cape Town Convention

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964  The Protocol provides that the Cape Town Convention shall also apply in relation to an airframe or a helicopter if at the “time of conclusion” of the applicable Agreement, is registered or agreed to be registered in a national aircraft registry of a Contracting State. Under the Cape Town Convention, a registered interest has priority over all other subsequently registered and unregistered interests. A Contracting State, however, may declare that certain categories of non-consensual rights or interests excluding those that are specifically registrable in accordance with the terms of the Cape Town Convention, may be entitled to priority without registration over a registered International Interest. The Cape Town Convention, specifically Articles 39 and 40, contemplates two forms of Non-Consensual Rights or Interests (NCRIs). The first are those that are created by the laws of a Contracting State which have priority without registration, over an interest in an object equivalent to that of the holder of registered international interest and with respect to which a Contracting State has made a declaration under Article 39. Second are those which can be registered by a declaration made by a Contracting State under Article 40. If such an NCRI is registered, it will be treated like a registered international interest and it would have priority over any later registered as well as unregistered interests. Safeguards. Irrevocable Deregistration and Export Request Authorisation (IDERA) is one of the most important aspects of the Cape Town Convention. IDERA is an authorisation which gives a designated party the authority to seek deregistration and export of the aircraft. By virtue of the debtor’s submission of IDERA, the person in whose favour it has been issued or its certified designee, becomes entitled and is the only person entitled to procure the deregistration and export of the aircraft in accordance with the terms of the IDERA, subject to applicable safety regulations. The debtor cannot revoke IDERA without the written consent of the authorised party. On the basis of the recorded IDERA, the relevant aviation authority, the Directorate General of Civil Aviation (DGCA) in India is required to enforce the remedies of deregistration and export at the request of the authorised party without the need for a court order. In addition, registry authority and other administrative authorities in the applicable Contracting State must expeditiously cooperate with and assist the authorised party in the exercise of remedies permitted by the Protocol, including application for relief pending final determination. India made following declarations on the applicability of the Cape Town Convention: l Declaration under Article 39(1)(a) (have priority, without registration).  Liens by airline employees for unpaid wages arising since the time of a declared default by that airline.  Liens by Authority in India for unpaid taxes/charges arising since the time of a declared default by that airline.  Liens by Repairers of the aircraft or engine to the extent of service or services performed on and value added to that aircraft object. l Declaration under Article 39(1)(b) (have priority, without registration).  Definite lien right is given to an inter-governmental organisation, who is a provider of services such as air navigation services, etc.  Indian Government or any inter-governmental organisation in which India is a member or other private provider of SP’S AIRBUZ • Issue 1 • 2016 • 27

Industry

Regulations

Entry of Tata-SIA Vistara and expansion of AirAsia India has made the environment more competitive

PHOTOGRAPH: Airbus

public service in India can arrest or detain an aircraft object for payment of amounts owed to the Government of India, any such entity, organisation or provider directly relating to the service or services provided by it in respect of that object or another aircraft object. Declaration under Article 40 (registrable, as if the right or interest were an international interest having priority over any later interests): Lien in favour of an authority in India (for unpaid taxes/ charges), airline employees (for unpaid wages) arising prior to the time of a declared default by that airline and rights of person obtaining court order permitting attachment of an aircraft. Declaration under Article 52: Cape Town Convention applies to all territorial units. Declaration under Article 53: High Courts within respective jurisdiction in India to be the relevant courts for lessor to establish its claim (for the purpose of Article 1 & Chapter XII of the Convention). Declaration under Article 54(2): Any and all remedies available to the creditor under CTC which are not expressed under the relevant provision thereof to require application to the court may be exercised without court action and without leave of the court.

Case Laws. Having discussed the relevant features of the Cape Town Convention let us review the following important case laws: l DVB Aviation Finance Asia PTE Ltd vs DGCA and Anr. Lessors (DVB) while exercising their right of termination of leases sought deregistration of their aircraft (two Airbus A320) from DGCA. Lessee (Kingfisher Airlines) objected to deregistration and unilateral termination of the lease on the ground that they had the right to purchase the aircraft and had acquired equity interest in the aircraft. DGCA insisted on Kingfisher’s 28 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

no-objection certificate for processing deregistration of the aircraft. The Delhi High Court ruling was for the DGCA to deregister the aircraft as the no-objection certificate was not required since DVB had Deregistration Power of Attorney. As per the Delhi High Court “Inter-se rights (right to purchase of Kingfisher) cannot come in the way of the petitioner seeking deregistration of the aircraft”. Corporate Aircraft Funding Company LLC vs Union of India. DGCA did not deregister the aircraft without clearance by DRI pending their investigation on evasion of custom duty. Delhi High Court held the irrevocability of the Power of Attorney, which clearly empowers the Petitioner to exercise power of deregistration. The Court ruled that the IDERA provisions confer the power of deregistration and DGCA is required to assist the authorised party in the exercise of remedies, which includes the procurement of deregistration of the aircraft. Further, the Court said that there is no power under the Customs Act by which it can prevail upon DGCA to desist from deregistering the aircraft. AER Lingus Ltd vs Airports Authority of India (AAI) and Union of India. The Bombay High Court held that if the dues are owed by the airline operator to the AAI, the owner of such aircraft cannot be deprived from deregistering and repossessing their aircraft. As per the court: “The owner can be held liable to pay charges to the AAI only if there is a contract between the AAI and the owner for payment of these charges or there is any Law which obliges the owner to pay these charges to the AAI”. International Lease Finance Corporation vs Union of India. High Court ruled: “The concerned airport operators (Delhi) shall release all the deregistered aircraft to the respective owners/lessors immediately so that these aircraft can fly out of the country. They are at liberty to collect parking charges from the owners/lessors from the date of deregistration”.

Industry

Regulations

The Indian Scenario. India has been one of the world’s ‘highest operating cost’ aviation markets. Most of India’s airlines except IndiGo have poor balance sheets. CAPA forecasts that the airlines are likely to report losses of $350 million in March 2016. With SpiceJet’s financial and operating performance deteriorating and Jet Airways’ persistent losses, the scenario has been volatile until some respite due to softening of the ATF prices. Entry of Tata-SIA Vistara and expansion of AirAsia India has made the environment more competitive. Competition in prices being one of the main strategies of the new entrants, the new airlines by increasing capacity impacted the bottom lines of the existing carriers. Any further introduction of additional capacity is likely to adversely affect the business sustainability of weaker airlines. Therefore, in view of the persistent high-cost operating environment and experience with Kingfisher and SpiceJet, banks and lessors will be proactive in protecting their interests by re-possessing their aircraft. While the courts in India have been favourably inclined towards lessors and financiers in deregistration and repossession of their aircraft, it is pertinent to note that in most cases, either the lease agreements had already been unilaterally terminated or the aircraft flown out of Indian territory prior to the deregistration request. The aircraft being out of India influenced to a great extent the court’s decisions. Therefore, in future too, similar situation is likely to restrain the Indian regulatory authorities, the Indian courts and the lessee from taking any unfavourable steps towards the lessors. Also, with these court

Aircraft (Third Amendment) Rules, 2015, has been a much needed step in aligning the domestic laws with the Cape Town Convention rulings as precedent, it would be difficult for DGCA not to cancel the certificate of registration and deregister the aircraft when the lease has been terminated as this would be in contravention of the Indian laws (Rule 30(6)(iv) The Aircraft Rules, 1937). In the case of DVB, the court did not go into the merits of Kingfisher’s contention that the aircraft should not be deregistered as Kingfisher has equity interest in the aircraft and the right to exercise the purchase option under the lease. Therefore, in different circumstances in future, such as the aircraft being in India and the operator being in a financially stronger position, the courts may not take a similar view in such kind of lease agreements having built-in purchase option. Another aspect which would be of importance to the lessors is the risk of liens by various entities under the declaration made by India under Article 39 and Article 40 of the Cape Town Convention. As discussed earlier, the liens in respect of unpaid wages, taxes and charges can be enforced by India under the rights of detention or arrest of the aircraft (India’s declaration under Article 39 & Article 40 of the Cape Town Convention). The declaration under Article 39 regarding the detention rights for dues in respect of that object or another aircraft object is akin to fleet lien. Fleet lien, being incorporated in British and Canadian laws, has been upheld by their judiciaries. UK and Canada have rules to exercise the fleet detention power. For BAA (as

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 an aerodrome authority of a “designated aerodrome”) this power is set out in Section 88 of the Civil Aviation Act, 1982. For the CAA an equivalent power is set out in Section 83 of the Transport Act, 2000. In one of the prominent cases (Global Knafaim Leasing Limited & CGTSN Limited vs The Civil Aviation Authority, BAAA Limited), the court ruled that Eurocontrol and the Civil Aviation Authority properly exercised their rights of detention. With respect to title holders (Global Knafaim) the court quoted from a Canadian case stating that legal title holders are in a better position to protect themselves against losses than airport authorities or other governmental or quasi-governmental agencies because they ‘can select airlines they are prepared to deal with and negotiate appropriate security arrangements as part of their lease transactions with airlines. However, the fleet or general lien not being envisaged for entities like airports under the Indian laws, it can be challenged in the courts in case the airports in India resort to it. In a recent case involving SpiceJet (Awas 39423 Ireland Ltd & Ors vs DGCA March 19, 2015) the Delhi High Court ruled that DGCA has to mandatorily deregister the aircraft objects once the creditors fulfill the conditions prescribed in Aircraft Rules. Further the Court opined that “with the insertion of sub-rule (7) in Rule 30 of the Aircraft Rules, the position with regard to the manner in which the DGCA has to proceed, once a creditor seeks recourse to the remedy under Article IX of the Protocol, has only acquired greater clarity. The court, therefore, cannot interdict the process of deregistration on the nebulous ground of equity as it would be contrary to the provisions of the Convention and Protocol to which India is a party.” In view of the above case laws and recent amendments in the Aircraft Rules, it is most likely that the DGCA would in future deregister the aircraft, whenever the designated party seeks deregistration and export of the aircraft, irrespective of the liens and liabilities of the airline operator. Therefore, the airports and concerned authorities need to develop a real-time aircraft-wise monitoring mechanism for timely enforcement against the operators as well as certain additional risk management strategies like bank guarantees rather than resorting to knee-jerk reaction like delaying deregistration or arresting the aircraft when the dues and airline losses become unsustainable. It would be unfair to penalise the lessor or financier by detaining, refusing to deregister their aircraft objects or entangling them in legal process for the dues owed from the operator. India’s reputation as a fair business market with rule of law being of national interest, it is suggested that: l Aircraft-wise real-time monitoring mechanism which updates the dues, may be setup at airports and duplicated at DGCA and Civil Aviation Ministry. Even foreign lessors need to monitor the liabilities on their aircraft and incorporate relevant clauses in agreements. This will not only promote transparency but also ensure that the financial liabilities are never allowed to cross acceptable threshold. l Agencies, service providers and financiers may opt for bank guarantees as well as guarantees/collaterals in real value as opposed to equity or mortgaging certain other intangible assets like brand. What would a share or a brand be worth after the airline goes bankrupt? l The lien and detention rights if at all to be enforced, must be done through the judicial process rather than through regulatory or executive machinery which may be interpreted by foreign lessors or financiers as being influenced and unfair. l Rights of passengers for compensation for their unused air tickets resulting from airline bankruptcy may be enforced. SP SP’S AIRBUZ • Issue 1 • 2016 • 29

airShow

Preview

Singapore Airshow: Asia-Pacific’s Crowning Glory

PHOTOGRAPH: Airbus

The Airbus Global Market Forecast 2013 projected that the demand for air traffic is expected to grow at 4.7 per cent annually, with the Asia-Pacific being the bustling region of growth as it takes the lead in the surging demand, surpassing Europe and North America by R. Chandrakanth

ocated at the heart of the Asia-Pacific region, the Singapore Airshow provides the perfect gateway to this thriving region of growth. Singapore Airshow, Asia’s largest and one of the most important aerospace and defence exhibitions in the world, will return for its fifth edition from February 16 to 21, 2016. Singapore Airshow has been successful in bringing together the largest number of high-level military and government delegations and leading industry players from air30 • SP’S AIRBUZ • Issue 1 • 2016

www.spsairbuz.com

lines, airport operators, aircraft manufacturers and related industries from all corners of the globe. The 2016 edition has received a strong vote of confidence with over 1,000 participating companies from some 50 countries all confirming their attendance at the Airshow. This constitutes over 90 per cent of exhibition space being taken up before the show, 75 per cent of which are returning exhibitors and industry heavyweights, such as Airbus, Bell Helicopter, Boeing, Bombardier, Embraer, Israel Aerospace Industries

airShow

Preview

(IAI), Pratt & Whitney, Rolls-Royce, ST Engineering, Thales and UTC Aerospace Systems. Asian Fleet Size Projections. The projected growth of Asia’s aircraft fleet size over the next 20 years is phenomenal. According to Boeing, Asia will account for close to 40 per cent of new aircraft deliveries whilst North America and Europe will account for 21 percent and 19 per cent respectively, making Asia’s fleet size the largest in the world by 2034. This rate of growth emphasises the need for regional investment to support and expand aviation infrastructure including airport and airspace capacity, and the corresponding increase in demand for MRO (maintenance, repair and overhaul) and other auxiliary services and industries. This underscores Singapore Airshow’s importance as the strategic platform of choice for key industry players to tap on emerging markets, showcase their latest products and technologies, forge partnerships and be attuned to the needs and development of the industry in the thriving Asia Pacific region. In addition to mainstay events such as the exhibition, static display, aerobatic display, technology seminars and strategic conferences, the upcoming show in 2016 will showcase new and enhanced segments such as Business Forums, back by popular demand. The Business Forums will cover four key areas – Emerging Technologies, Training & Simulation, Asia as well as the partnership between companies in France and Singapore. Together, they focus on the latest developments and business opportunities in the aerospace and aviation markets, providing insights and strategic guidance for attendees to tap on key aerospace growth markets. Aviation Training, Focus Area. The scope of the aviation training zone has been expanded to include a military training and simulation section to better meet the needs of the industry, in line with growing global demand for training and simulation. Aerospace Emerging Technologies Zone: The Aerospace Emerging Technologies Zone will offer exhibitors a platform to showcase their products and offerings in two broad categories – Aerospace Manufacturing and Aerospace IT. Shortfall of professionals. The Airbus Global Market Forecast 2013 projected that the demand for air traffic is expected to grow at 4.7 per cent annually, with the Asia-Pacific being the bustling region of growth as it takes the lead in the surging demand, surpassing Europe and North America. While the air transport sector is expanding worldwide, a study conducted by the International Civil Aviation Organisation (ICAO) has illustrated that there is however a shortfall in the supply of qualified aviation professionals and training capacities up till the year 2030. This shortfall is estimated to be at 1,60,000 pilots, 3,60,000 maintenance personnel and 40,000 air traffic controllers. The Asia-Pacific region projects the widest gap between training capacities and training needs over the next two decades, reflecting great potential for this market segment. Leadership Summit. Staying ahead of current trends, the 2016 edition will see the return of the Singapore Airshow Aviation Leadership Summit (SAALS), A STAR Aerospace Technology Leadership Forum as well as the Singapore Aerospace Technology and Engineering Conference (SATEC 2016). These highly-anticipated strategic conferences will curate discussion topics that are relevant to the current aerospace landscape and serve as a platform for insightful exchange and solutions-based discussions. SAALS 2016 With the theme of ‘Aviation Tomorrow: Managing New Challenges,

RELENTLESS JOURNEY OF EXCELLENCE SINCE 1964 Realising New Potentials’, will focus on new ideas and emerging technologies, while presenting new challenges for the sector and providing new opportunities and enablers to further drive the success of global aviation. SAALS 2016 will include keynote speeches from high-level government representatives, as well as panel discussions that will examine new developments in aviation and the role regulatory frameworks play in supporting these innovations and allowing the industry to deliver its full potential in a sustainable manner. SAALS 2016 will be at the Raffles City Convention Centre (RCCC) from February 14-15, 2016. Three key areas of discussion at SAALS 2016 include: the future of the Global Air Hub model; the evolving role of drones in aviation and their impact on the industry; and the way forward for reaching a Global Agreement on Aviation Emissions at the 2016 ICAO Assembly. Singapore’s Prime Minister Lee Hsien Loong will be the guest of honour at the opening dinner of SAALS 2016. The Forum will bring together the chief technology officers and thought leaders of the aerospace industry to share their views on the latest technological developments. Referencing the theme ‘Technological Perspectives for the Future’, speakers will share insights on meaningful near to mid-term technologies that may be implemented to enhance existing product lines, and key technologies that aerospace companies are keen to explore given a longer time horizon. Technology Conference, key highlight. Singapore Aerospace Technology and Engineering Conference (SATEC 2016) is the premier aviation conference that is held in conjunction with the Singapore Airshow. It is a platform for researchers, aviation operators and practising aviation engineers to present and discuss key developments and advancements in aerospace technology and engineering. SATEC 2016 is themed ‘Innovation in Aerospace’ and the discussions will centre on the development and implementation of new technologies in the aviation industry. SATEC is jointly organised by the Singapore Institute of Aerospace Engineers (SIAE) and Air Engineering and Logistics Department (AELD) of the Republic of Singapore Air Force (RSAF). Leck Chet Lam, Managing Director of Experia Events, said, “Singapore Airshow continues to be a catalyst for growth in the global aerospace and defence industry; providing a robust platform for engagement, interaction and dialogue. We are constantly calibrating our programme offerings to reflect key industry trends and create a dynamic environment for each participant.” This is evident in Singapore Airshow’s holistic programme line-up for 2016 that includes the enhanced Training and Simulation Zone and the Aerospace Emerging Technologies Zone as well as partnering France as the 2016 Feature Country and the France-Singapore Business Forum to open doors of partnership between Singapore and France. This enables industry stakeholders to drive future growth trends and leverage key initiatives for further collaboration and development for the global aerospace industry. France, Feature Country. The Feature Country series was first introduced at the Singapore Airshow in 2014 to spotlight on countries which have strong and thriving businesses in the aerospace, defence and aviation sectors. This year it is France. It is a key global aerospace services and products exporter, with an aerospace, defence and security industry worth 47.9 billion euros. French aviation companies have consistently had a strong presence at the Singapore Airshow and will be able to leverage its Feature Country status to chart new heights and showcase their latest technologies and innovations at the Singapore Airshow 2016. SP SP’S AIRBUZ • Issue 1 • 2016 • 31

Finally

MARCH TOWARDS A BRIGHT FUTURE! After 20 months of governance by the NDA Government, things appear to have begun to change for the better

ILLUSTRATION: Anoop Kamath

n early 2014, during the run up to the national elections, there was immense optimism in the civil aviation industry about the capability and intent of the Modi-led NDA Government if it came to power, to take decisive steps to revive this ailing and stagnant sector that has a crucial role in the well being of the national economy. However, by the end of 2014, there was widespread disappointment in the Indian civil aviation industry at the lack of action by the NDA Government and the consequent failure to deliver on the expectations generated earlier. The plan to build a large number of regional airports to enhance regional connectivity to provide the much needed impetus to regional aviation was placed on hold. Also, the controversial 5/20 rule defining the norms for flying on international routes by the newly established airlines seemed to have been relegated to the backburner. The status quo was particularly agonising for the Indian civil aviation industry which, as per analysts and experts, possessed the attributes for emerging as the third largest aviation market in the world by 2030. The only significant achievement by the Indian civil aviation industry that was visible was the upgrade of India’s air safety rating to Category I status by the US Federal Aviation Administration (FAA). However, after 20 months of governance by the NDA Government, things appear to have begun to change. The Ministry of Civil Aviation (MoCA) has made major policy changes to make it easier for airlines to acquire aircraft. As per the existing procedure, the scheduled operators were required to obtain no objection certificate (NOC) from the MoCA for acquisition of aircraft. Burdened with bureaucratic impediments, this was a procedure of mind boggling complexity was a nightmare for the prospective buyer. In order to make the procedure for acquisition of aircraft by the carriers more business friendly, the MoCA has delegated the power to grant NOC to the Directorate General of Civil Aviation (DGCA). Prospective buyers are no longer required to obtain initial clearance from the MoCA. The Minister of Civil Aviation P. Ashok Gajapathi Raju has adopted a progressive approach to the industry. He believes that as the Indian civil aviation industry needs to induct a large number of airplanes to sustain a healthy rate of growth, his Ministry will do everything possible to eliminate red tape and thus make it easier for the airlines to conduct their business. It appears that the move to scrap the highly restrictive 5/20 rule is gathering true momentum. Ashwani Lohani, the newly 32 • SP’S AIRBUZ • ISSUE 1 • 2016

www.spsairbuz.com

appointed Chairman and Managing Director (CMD) of Air India, has reversed the stance of his predecessor. Lohani is of the view that scrapping the 5/20 rule will introduce liberalisation in the norms for flying abroad for the newly established carriers that will help boost international traffic from India as well as encourage new airlines to foray into this arena. Reports indicate that the proposal to scrap the 5/20 rule has not only the backing of the Minister of Civil Aviation Gajapathi Raju who has been forcefully advocating this reform saying that this rule was damaging the nation’s reputation; but also of Prime Minister Narendra Modi. In an answer to Jayant Baranwal, Editor-in-Chief, SP’s AirBuz, during an exclusive rendezvous early this year, the Minister of Civil Aviation said “I think this (5/20 rule) is an impediment to the growth of Indian aviation”. (the excerpts appear on page 10 of this issue of SP’s AirBuz; the rendezvous with the Minister was first published by SP’s Aviation 1/2016 on page 12). Assessment by the Centre for Asia Pacific Aviation is that the 5/20 rule in its present form is unlikely to find a place in the National Civil Aviation Policy (NCAP) 2015. The 5/20 rule is likely to be replaced by what is being projected as a more fair and just system based on accumulation by newly established carriers of points termed as domestic flying Credits (DFC). New airlines will earn DFC while flying on domestic routes, points earned being substantially higher if they opt to fly to the airports located in remote areas of the country. This is likely to encourage airlines to connect metro cities to secondary airports. DFC accumulated can be redeemed to fly in the international segment. The NCAP 2015 in draft form has been under circulation amongst all the stakeholders for about a year or so for their comments and suggestions and the policy should be finalised and hopefully implemented in the near future. In the Interview mentioned earlier, the Minister gave the assurance that the NCAP 2015 was in the final stages of processing and would be implemented soon. A policy evolved through a process of wide consultation amongst the stakeholders is likely to find better acceptance by the Indian civil aviation industry. Finally, the Indian civil industry is receiving the attention from the government that it deserves for it to sustain its march to a bright future! SP — B.K. Pandey

at you fly